Revenue remained steady in the year to July
Redrow has posted better than anticipated results for the year but warned of a difficult market ahead with profit set to be cut in half in 2024.
The housebuilder reported an income of £2.13bn in its full-year results for the year to 2 July 2023, only slightly down from the £2.14bn and higher than had been anticipated when the firm released its interims earlier this year.
Chief executive Matthew Pratt said the accounts, published this morning were “strong” in the face of “continuing political and economic headwinds”.
Underlying pre-tax profit was down from £410m to £395m, which was attributed primarily to the cost of inflation exceeding house price inflation in the year.
According to Pratt, build cost inflation was as high as 8% in some cases, although he said these pressures had “since eased”, predicting build cost inflation to be around 4% in the new year.
Statutory pre-tax profit was actually up from £246m to £395m, due to an exceptional item worth £164m incurred in 2022.
The firm’s dividend to shareholders in the year was 22p per share, which totalled £108m.
Over the past 12 months, the business has cut roughly 165 positions – through redundancies and a hiring freeze – and closed two regional businesses.
Looking forward to next year, Redrow anticipated profit to be almost cut in half, with the forecasted figure put between £180m and £200m. Revenue was also expected to drop to between £1.65bn and £1.7bn.
This is based on a sales rate in line with the 0.46 per outlet per week recorded in this year, although the first 10 weeks of the new financial year saw the firm record a rate of just 0.34.
“You do expect that as we head into the autumn period, we might see a better sales rate. We certainly hope to see some better sales in the next spring,” said Pratt.
“I think it’s fair to say we’ve seen a very sharp shock in terms of the economy with regards to mortgage rates and I think you can’t ignore the fact that that has had an effect on the market.”
Speaking ahead of the House of Lords debate on nutrient neutrality rules, Pratt said Redrow were not heavily impacted by the rules, something he attributed more to “luck than judgement”.
The Labour Party is expected to oppose the government’s proposed deregulation of rules around nutrient neutrality, which are intended to protect waterways at risk from pollution.
According to the House Builders Federation, nutrient rules are blocking the development of 150,000 rules but Pratt said the source of pollution related more to farms than housing.
He described criticism of commercial housebuilding as “misdirected” and said it “seems to be another area where they seem to be placing the blame somewhere where it is not our fault”.
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