But housebuilder says cost cutting has brought down net debt to £270m at half-year point
Margins at housebuilder Redrow will be 5 percentage points below expectations when it reports its full-year results later in 2009.
In a trading update ahead of its interim results announcement on 24 February, the firm admitted that trading will remain hard throughout this year, with no improvement of the market in sight.
It said: “It is our current view that gross margins for the full year will be adversely affected by approximately 5 percentage points as compared with management's previous expectations.”
Redrow said that net debt at the half-year is below £270m - ahead of management expectations - thanks to a cost-cutting exercise involving job losses and the closure of two offices. The firm said it is on target to bring that figure down below its target of £225m by its year-end in June.
The continuing problems in housing were highlighted by a 50% fall in completions, with just over 1,000 homes completed in the first half-year, down from 2,111 a year earlier. However, Redrow said this figure “was slightly ahead of our expectations”.
The average selling price slipped nearly 13%, while forward order sales for the six months to the end of December 2008 dropped 40% on the same period the previous year. Sales in the first six months were down 49% to 853.
Redrow added: “The level of consumer confidence and the condition of the lending market lead us to conclude that the trading environment will continue to be extremely difficult in 2009.”