Tuesday 04 September 2018 8:17 am

FTSE 250 housebuilder Redrow boosts profits but calls for Brexit clarity

Housebuilder Redrow called for clarity over Brexit and the government’s Help to Buy scheme today to improve the health of the UK housing market, as it reported its full-year results.

The figures

Despite the deflating nature of the UK housing market, the FTSE 250 firm managed to buck the trend, posting a 16 per cent spur in revenue to £1.92bn driven by higher completion rates and a seven per cent hike in house prices.

Pre-tax profit also leapt 21 per cent to £380m, while earnings per share improved 22 per cent for investors to see earnings per share of 85.3p, and a full-year dividend of 28p.

Legal completions ticked upwards by ine per cent to 5,913 for the year to the end of June, as Redrow posted a record order book of £1.1bn worth of land holdings, reporting net cash of £63m.

Why it’s important

Redrow’s earnings come against a backdrop of high demand for new homes, but stalling property prices, with house prices falling half a per cent in August, according to Nationwide data.

Despite its success, Redrow’s chairman, Steve Morgan, called on the government to provide clarity over Brexit – and the status of its Help to Buy scheme – to continue the firm’s momentum.

“There is no doubt that clarity over Brexit and the future of Help to Buy would improve market sentiment. Given that clarity, we will continue to deliver,” he said.

Government ministers are reported to be planning a review of the house buying initiative, which was introduced in 2013 to help first-time buyers get on the property ladder.

While government statistics show that first-time buyers comprise 81 per cent of people buying a home with Help to Buy’s equity loans, one in five households using the scheme had done so to upgrade their home rather than buy a new one, according to the Sunday Telegraph.

Redrow’s demand for Brexit clarity echoes many similar calls from other businesses, coming after estate agents Savills blamed Brexit in part for a drop in profits. The chance of a hard Brexit stands at 25 per cent, according to a Reuters poll of economists this morning.

What Redrow said

“I am delighted to report that Redrow has delivered another year of strong growth and record results, achieved by completing 5,913 new homes a nine per cent increase on the previous year,” said Morgan.

“Redrow is committed to growing our output to help the country’s requirement to increase the number of new homes built. We have a very strong forward order book, first class land holdings, an excellent balance sheet and we are able to react quickly to changing circumstances. However, there is no doubt that clarity over Brexit and the future of Help to Buy would improve market sentiment. Given that clarity, we will continue to deliver.”