Redrow posts record full-year results, calls for clarity on Brexit and Help to Buy

FTSE 250 housebuilder Redrow posted a jump in full-year profit on Tuesday as revenue rose to a record level on the back of higher completions, and the company called for clarity over Brexit and the Help to Buy scheme to underpin market sentiment.

In the year to 30 June, pre-tax profit was up 21% to a record £380m as revenue rose 16% to a record £1.92bn and completions increased 9% from the previous year to 5,913. Meanwhile, the average selling price was 7% higher at £332,300, mainly due to the relatively faster growth of its Southern business.

Earnings per share were up 22% to 85.3p and Redrow lifted its full-year dividend by 65% to 28p a share.

In addition, the order book stood at a record £1.1bn versus £1bn in 2017 and the group achieved a cash position of £63m compared to net debt of £73m the year before.

Redrow said demand for new homes remains robust despite the uncertainty surrounding Brexit, while overall house price inflation has moderated to a sustainable 2%. Mortgage availability is "excellent", the group said, and with low interest rates by historic levels, the mortgage market remains very competitive.

Help to Buy continues to support home buyers and the housing industry. In the last financial year 1,794 of Redrow's private reservations were secured through the scheme, a similar level to the previous year.

As far as current trading is concerned, the housebuilder said demand is "strong", with sales revenue in the first nine weeks in line with last year despite Brexit and the exceptional hot weather.

Chairman Steve Morgan said: "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."

Canaccord Genuity said this was a "strong" set of results, around 5% ahead of expectations at the pre-tax profit level, while the balance sheet was also stronger than expected.

"Recent trading and order book comments are reassuring with revenue flat over the last nine weeks; implies volumes slightly down but this is more reflective of a normal quieter summer trading period compared to stronger recent years," it said.

"Given the strong growth in net assets combined with an attractive well covered dividend, we continue to believe the share looks the most attractive in the sector. The group continues to deliver strongly and looks set to continue to deliver in line with its guidance to FY 2020, supported by a strong land bank and balance sheet, assuming the market holds up as expected."

At 0905 BST, the shares were up 2.3% to 569.50p.