Housebuilder Redrow signalled that it could be ready to enter the takeover market after reporting dampened full-year results this week.
Redrow, which has itself been touted as a takeover or merger target, reported no change in its pre-tax profit since last year, at £120.5m. This is a further sign of difficult conditions in the housing market. Margins were also down slightly from 17.5% to 17.1%, although legal completions rose by 1.9% to 4,823 homes. Turnover grew 3.3% to £795.7m.
David Arnold, group finance director, said interest rate rises and the credit crunch on mortgage lenders were affecting the housing market. He said: “There is evidence that credit market turbulence has dampened consumer demand and the housing market generally.”
However, Arnold said the company was “well placed for the current year” and had strong forward sales. And with competition for land banks at a premium, he hinted that Redrow may enter the acquisitions market.
He said: “We are focused on growing Redrow and will look at any transaction, whether it is corporate or an investment.”
Meanwhile, rival Bovis Homes, also touted as a takeover target, sounded another note of caution about the market, despite posting solid interim results for the six months to 30 June. Its pre-tax profit rose 10% to £58.4m while turnover was up 3.8% at £259.9m. However Malcolm Harris, chief executive, warned that consumers had become cautious since the rate rises, with buyers taking longer to decide whether to purchase a home.
A city analyst said: “For both companies, the next six months will be critical, in what may be a wobbly market.”