Redrow plc, the Flintshire-based house building giant, said on Thursday it expects to achieve revenue of around £2.05 billion for its full financial year, as its CEO said early indications for 2023 are “better than anticipated and the market appears to be finding a new, natural level.”
For its half-year to January 1, 2023, Redrow reported revenue just below the same period last year at £1.03 billion (2022: £1.05bn) with total home legal completions in the first half of 2,485 (2022: 2,749).
Profit before tax was also comparable to the same period last year at £198 million (2022: £203m).
Interim dividend of 10p is in line with the prior year and the company said it intends to maintain its full-year dividend ratio of 33%.
“We are still experiencing build cost increases across materials as energy inflation, in particular, continues to have an impact,” said Redrow.
“We expect cost inflation of c7% for the full financial year. Over time we expect the current market to drive more competition and to mitigate build cost inflation amongst our suppliers and subcontractors.
“This strong financial performance was delivered in the context of a broken planning system. At a time when the Government is trying to achieve growth, it remains a major barrier.
“Planning permissions are taking a record amount of time – well in excess of the statutory timescale of 13 weeks for reserved matters.
“This means a huge missed opportunity for the country in lost school places, infrastructure, employment and social mobility.
“We continue to call on the Government to revisit its housing and planning strategy to help the country deliver growth and the homes it so badly needs to address the chronic housing shortage.”
Redrow CEO Matthew Pratt said: “Redrow’s proven business model has played an important role during a time of significant political and economic uncertainty.
“We have award-winning homes and places, a strong forward order book, land acquired in the last few years at good margins, and current cash reserves of £107m.
“This is despite completing a £100m share buyback exercise on 13th January 2023, just after the financial half-year under review.
“We have experienced a positive start to second half trading. Whilst 2023 will be a challenging year as the market resets, early indications are better than anticipated and the market appears to be finding a new, natural level …
“We entered the second half with a total order book of £1.1bn, of which £0.8bn was private.
“Our net private reservation rate for the first 5 weeks of the second half was an encouraging 0.51 compared to 0.38 in the first half.
“We therefore expect to achieve revenue of around £2.05bn for the full financial year, with an operating margin in the region of 18% to 18.5%.”