Redrow results seen at low end after tough Autumn

10th Nov 2023 07:16

(Sharecast News) - British housebuilder Redrow has warned that full-year sales and profits would likely be at the lower end of guidance due to a subdued Autumn trading period.

All of Redrow's key performance metrics have worsened year-on-year since the start of the financial year which began on 3 July, such as the value of reservations, average reservations per outlet, cancellations, selling prices and the order book.

The company is still guiding to revenue between £1.65bn and £1.7bn and profit before tax of between £180m and £200m, but with a lower-than-expected sales rate due to the "more subdued Autumn housing market" results are more likely to be "towards the lower end of the range", the company is expected to say at Friday's annual general meeting.

Revenue in the past financial year ended 2 July 2023 was £2.13bn, while pre-tax profits were £395m.

"Following the usual summer slowdown we reported in our 2023 results announcement, the housing market has remained subdued through the Autumn," said chair Richard Akers. "The business has had to adapt to this more difficult trading environment in terms of build rate and operating costs."

The value of net private reservations in the first 18 weeks of the financial year were 25% below the prior year at £384m, gross private reservations per outlet per week fell to 0.49 from 0.63, while cancellation rates have risen to 25% from 22% due to problems with buyers obtaining mortgages lower down the housing chain. Selling prices meanwhile were down 2.5% year-on-year at £471,000.

As of last week, the total order book was just £864m of which 66% was exchanged, compared to £1.36bn at the same time last year with 74% exchanged.

Meanwhile, overall build cost inflation will be at around 7% for the current financial year despite recent falls in inflation "given the inflation inherent in the opening work in progress".