12th Feb 2025 08:56
(Alliance News) - Barratt Redrow PLC on Wednesday said it expects annual earnings at the upper end of market expectations amid signs of improving market conditions.
In response, shares in the firm are 8.5% higher at 474.15 pence each in London on Wednesday morning. It is the best performing stock in the FTSE 100 which is up 0.2%.
The Coalville, England-based housebuilder said the integration of Redrow is "progressing well" with GBP100 million of cost synergies expected, GBP10 million ahead of the original target.
Pretax profit improved 23% to GBP117.2 million in the 26 weeks to December 29 from GBP95.2 million a year earlier. Revenue rose 23% to GBP2.28 billion from GBP1.85 billion.
Reported metrics are based on the reported performance of the Barratt Group in the comparable reporting period, and do not include Redrow, an acquisition sealed in August to form Barratt Redrow, the firm explained.
Aggregated revenue, so including Redrow, amounted to GBP2.49 billion in the half year to December 31, 2023. Pretax profit totalled GBP186.9 million over that period.
Chief Executive David Thomas said he is "pleased" with the performance.
"As the economic, political and lending environments have stabilised, there has been some recovery in customer demand and we have seen solid reservation activity since the start of January, building a strong forward sales position.
"As a result, we now expect our full year adjusted profit before tax will be towards the upper end of market expectations."
Barratt Redrow puts adjusted pretax profit consensus at GBP542 million, with a range between GBP506 million to GBP588 million.
The firm reported total home completions of 6,846 up 11% from 6,171 a year prior.
Looking further it ahead, it provided medium-term guidance for the newly combined group.
It expects to deliver 22,000 homes per year in the medium-term, with the operating margin reaching around 15%. The operating margin in the half-year just ended was 5.0%, slipping from 5.3%.
Barratt Redrow declared a 5.5 pence per share interim dividend, up 25% from 4.4p. The firm has refined its dividend cover to 2.0 times adjusted earnings from 1.75x from 2026.
In addition, it is kicking off a share buyback programme which will return GBP100 million per year, starting with a GBP50 million portion in the second half of its financial year.
Barratt Redrow said based on solid reservation activity since the start of January, it expects to deliver total home completions of between 16,800 and 17,200 in financial 2025, including around 600 joint venture completions.
By Jeremy Cutler, Alliance News reporter
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