Barratt Redrow shares jumped on Wednesday after reporting a remarkably upbeat set of half-year results, with the housebuilder now expecting full-year adjusted profit before tax to reach the upper end of market expectations.
Results are released against a backdrop of uncertainty around the UK economy and the housing market, making Barratt Redrow’s upbeat assessment of their activities a breath of fresh air for the market.
The company, which recently acquired Redrow, delivered 6,846 total home completions in the period, showing an improvement from Barratt’s standalone figure of 6,171 in the previous year.
Investors will find the group’s sales performance has been particularly encouraging, with the net private weekly reservation rate increasing by 33% to 0.60, compared to the combined Barratt and Redrow rate of 0.45 in the same period last year.
This sales momentum has continued into the new year, with reservations maintaining a rate of 0.60 from 30 December 2024 to 2 February 2025.
Forward sales remain healthy, with 10,903 homes valued at £3,350.3 million as of 2 February 2025. Of these, 7,702 homes are either exchanged or contracted, demonstrating strong conversion of reservations to firm sales.
The company has provided guidance for total home completions between 16,800 and 17,200 for the full year, including approximately 600 joint venture completions. These full-year forecasts are perhaps the driving force in the 5% gain in shares at the time of writing.
Financial results show adjusted profit before tax of £167.1 million, after accounting for purchase price allocation adjustments of £50.4 million related to the Redrow acquisition. The company maintains a robust balance sheet with net cash of £458.9 million, despite paying a final dividend of £170.5 million and increasing investment in land and work in progress by £332 million.
“Barratt Redrow sprinkled some optimism into the UK housing sector this morning, as Britain’s biggest builder reported earnings at the upper end of market expectations. Strong demand heading into 2025 was reinforced by the seamless integration of Redrow, which is now on track to deliver over £100m in cost synergies,” said Mark Crouch, market analyst at investment platform eToro.
“With UK housebuilders battling numerous challenges in recent months, this morning’s update will come as a relief to investors, as Barratt bucks the trend of disappointing sector earnings. Higher mortgage rates and building costs have weighed heavily on profitability for housebuilders, and while Labour’s planning reforms are expected to help, their impact will take time.”