Redrow achieves 17% rise in pre-tax profit and claims that housing market will remain robust despite interest rate rises.
Redrow Homes has reported a 17% rise in preliminary pre-tax profit to £124.1m for the year to 30 June 2004 amid signs of a soft landing in the housing market.
Turnover also increased to £670.3m, an increase of 10.2%, and Redrow said that it would be increasing the dividend per share by 20% to 9p. Average selling price rose from £147,900 to £154,700.
Redrow said that the rise in interest rates had lead to a slowdown in house price growth. However, Redrow said that the fundamentals in the housing market remained robust.
Chief executive Paul Pedley said: “The rate of increase in selling prices is moderating, which, when combined with the underlying level of demographic growth, a continuing shortage of quality housing and sound consumer confidence driven by high levels of employment should result in a sustainable ‘normal’ housing market.”
Geographic expansion accounted for some of Redrow’s profit growth. It formed a division in the South Midland last year and West Country this year and it says it intends to expand into the East Midlands. It has also established a ‘Regeneration Team’ to focus on the Thames Estuary, which has been earmarked for growth by deputy prime minister John Prescott.
The housebuilder’s landbank increased from 16,000 to 17,400 plots, of which 15,000 have planning permission. Redrow says the land is predominantly brownfield and represents four year’s supply for the firm.
Redrow also announced that it would be doubling the amount of homes constructed using light steel frame constructions to 15% of completions. Redrow and Corus have a joint venture company called Framing Solutions, which provides Redrow with prefabricated steel frames.
