First half results from housebuilders Redrow (RDW) and Barratt Developments (BDEV) see both companies in a sunny mood following the decisive outcome from December’s general election.
Barratt, whose results look particularly robust, gains 3.4% to 848.8p, extending its gains since the election result was announced to more than 25%.
Redrow posted more mixed numbers but investors are still sufficiently encouraged by positive noises on recent trading to mark the shares 0.6% higher at 826.8p. It is now up more than 20% since Boris Johnson secured his 80 seat majority.
Barratt proposed a special return for shareholders after reporting a rise in half-year profit as higher completions boosted revenue.
In a further extension to its capital return plan, the company proposed special returns of £175m in November 2020 and November 2021.
For the six month period ended 31 December 2019, pre-tax profit increased by 3.7% to £423m and revenue rose 6.3% to £2.3bn year-on-year. Underlying margins were also higher despite lower average asking prices.
Home completions rose 9.1% to 8,314, and the company said it was on track for 3%-to-5% growth in wholly owned completions in 2020.
CONFIDENCE BOOST
Commenting on the update Irish stockbroker Davy says: ‘The solid volume growth performance from Barratt Developments in H1 has increased confidence that the company can grow full year completions in its medium-term range of 3% to 5%.
‘Margin progress has been good in the face of a challenging inflation environment and we see upside to consensus estimates on the back of this performance.’
Redrow posted a 15% fall in first-half profit after it completed a smaller number of homes. The company also announced that executive chairman John Tutte would step down to the role of non-executive chairman in July and retire ahead of the company's 2021 annual general meeting.
Current chief operating officer Matthew Pratt would be appointed chief executive from 1 July 2020.
Pre-tax profit for the six months through December declined to £157m, down from £185m on-year.
Revenue fell 10% to £870m, as legal completion fell 14% to 2,554. Redrow reiterated that it expected legal completions to be weighted to the second half, on a roughly 40-to-60% split. Redrow declared an interim dividend of 10.5p, up 5% year-on-year.
You can read our latest thoughts on Redrow here.
