Redrow posts record results, announces special payout
Housebuilder Redrow posted a record set of interim results on Wednesday even as sales took a hit from Brexit-related uncertainty.
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In the six months to the end of December 2018, pre-tax profit rose 5% to £185m on revenue of £970m, up 9% from the first half of the previous year. Legal completions were up 12% to 2,970 and earnings per share increased 5% to 41.5p.
Return on capital employed came in at 28% versus 25% the year before and the interim dividend was lifted by 11% to 10p a share.
The company also said that it was proposing a 30p per share cash return to shareholders through a B share scheme, in addition to the 10p dividend.
The group's total order book rose 11% during the half to a record £1.16bn and the average numbers of outlets increased to 129 from 127 the year before. The average selling price of private home was up 4% to £391,000, while affordable homes saw their ASP push up 15% to £141,000, mainly due to growth in the Southern business.
Chairman Steve Morgan, who is due to step down next month, said: "The market during the run up to the festive period and the first two weeks of 2019 was subdued by macroeconomic and political uncertainty.
"However, sales over the last three weeks have bounced-back with reservations running at similar levels to last year's strong market activity."
Overall, private sales for the first five weeks of 2019 came in at £156m versus £166m in 2018. Still, Morgan said that given the group's record £1.2bn order book, its strategy remains on track and he is confident that this will be another year of "significant progress" for Redrow.
At 0915 GMT, the shares were up 1.5% to 601p.
Shore Capital analyst Robin Hardy said the surprise in the figures is the extra capital return of 30p per share.
"This is a generous distribution, but we note two aspects: 1) this is more than the current cash position; 2) it likely marks a swing away from Redrow being focused on growth.
"While the cash return may appear generous, the potential swing away from a focus on growth does remove one of the key attractions of this business and, to our mind, sends out a signal that we have certainly pass the peak of the cycle."
Canaccord Genuity said the cash return should be well received, particularly given that it is coming from a housebuilder focused on growth and delivering very good NAV per share growth.
"Shares now offer good growth with a very attractive yield for this year (note: 30p likely to be treated as a capital gain by UK tax residents). We reiterate our buy rating."