30th Jun 2020 10:21
(Alliance News) - Redrow PLC said Tuesday it expects to report a lower number of completed homes and revenue for its recently ended financial year, as it urged the UK government to extend the Help to Buy scheme to keep the recovery in housebuilding sustainable.
For the financial year to the end of June, Redrow completed 4,032 homes, down 37% from 6,443 the year before, leading to expectations of revenue being GBP1.34 billion, a 36% drop from GBP2.11 billion.
Profit for the year also is set to "substantially below" financial 2019, for which pretax profit was GBP406 million.
Redrow has secured 4,222 private reservations in the year with a value of GBP1.61 billion, compared the GBP1.67 billion the prior year.
The company said the timing of site closures as a result of the Covid-19 pandemic in late March had a "profound impact" on Redrow's results, which was initially budgeted to be disproportionately weighted to the end of the second half.
In the five weeks since reopening its sales offices, Redrow has achieved a net sales rate per outlet per week of 0.56, slightly lowered from 0.59 the year before, but the decline has been tempered by strong pent-up demand, especially from buyers using the Help to Buy scheme.
Redrow has entered its new financial year with a record order book of GBP1.42 billion, up from GBP1.02 billion the year before, of which 70% of revenue is contracted.
Looking ahead, the group said the prospects for the wider economy and the new homes market remains uncertain, even as trading remains encouraging as lockdown restrictions eased.
To ensure that the recovery is sustainable, Redrow has urged the government to allow the Help to Buy scheme to be extended beyond March next year, or alternatively allow the new scheme to provide access to a wider range of buyers.
In addition, Redrow will scale back its London operations to focus on the Colindale gardens developments and its higher returning regional businesses and Heritage product line. However, scaling back its London operations is expected to incur costs and significant impairments.
"As a consequence of the impact of Covid-19 and making these provisions the profit for 2020 will be substantially below 2019," Redrow said.
"This has been a challenging period for the industry and prevented the group from delivering another set of record results. The business has however demonstrated its resilience throughout the crisis and I am immensely grateful for the dedication of my colleagues, the commitment of our wider-workforce and the continuing patience of our customers as we adjust to a new way of working," said Executive Chair John Tutte.
Shares in Redrow were down 4.5% at 441.40 pence on Tuesday in London.
By Dayo Laniyan; [email protected]
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