Housebuilder Redrow (RDW) has unveiled impressive half year results, delivering a new record for sales, pre-tax profit and its order book.
Sales have jumped 20% to £890m in the six months to 31 December, supported by a 14% increase in legal completions.
Demand appears to remain resilient despite concerns over stalling house price growth and a potential slowdown in transactions.
Annual house price growth slowed from 2.7% in December to 2.2% in January, the lowest rate since July 2017, according to Halifax.
However Redrow's pre-tax profit shot up 26% to £176m in the period and it is optimistic about its outlook thanks to its order book hitting an all-time high of £1.05bn.
POTENTIAL PROFIT UPGRADES ON THE HORIZON
UBS analyst Miguel Borrega says Redrow is likely to benefit from profit upgrades of between 3% and 4%, needing only flat pre-tax profit growth in its second half to hit its £353m forecast.
Canaccord Genuity’s Aynsley Lammin notes the dividend hike was larger than expected, up 50% to 6p. She is encouraged by the reliable and strong trading, highlighting margins of close to 20%.
Another positive sign for Redrow shareholders is how effectively it deploys its capital. Its return on capital employed ratio is 25% - significantly higher than minimum level often sought by investors of 15%.
