Redrow glows despite big fall in profit
5 February 2020, 11:34
Executive chairman John Tutte also announced he would step aside and appoint a chief executive this year.
Home builder Redrow tried to convince investors there was nothing to worry about as it increased its dividend even in the face of a 15% fall in profit.
The company said it had expected a fall in its financials in the six months to December 31, as it looks like the 2020 financial year will be heavily reliant on sales in the second half.
Its statements seemed to calm the nerves of investors as shares rose on the news, by as much as 1.6% to 835p, after an initial drop to 798p earlier in the day.
“While first half results were down, the decline was down to the timing of completions and had already been flagged,” said Peel Hunt analysts Clyde Lewis and Alex Stout.
“More importantly, reservation levels have been good (both before Xmas and afterwards).”
Last year the company registered 54% of its balance of homes turnover in the second six months of the financial year, this year it expects that will increase to 60%.
Private net reservations rose by 18% to £936 million in the first half, revenue dropped 10% to £870 million, and the number of homes it completed fell from 2,970 to 2,554.
However bosses still increased the interim dividend by 0.5p to 10.5p.
“Redrow has once again delivered a robust operational and financial first-half performance consistent with our expectation that revenue will be considerably more weighted than usual to the second half,” said executive chairman John Tutte.
“Current market conditions, combined with our very strong order book give me confidence this will be yet another year of progress for Redrow and our expectations for the full year remain unchanged.”
It will be Mr Tutte’s final first half results in the role as he announced plans to remove the executive responsibilities from his role in July 2020, stepping aside to allow Matthew Pratt to become chief executive.
Mr Tutte will stay as non-executive chairman until the company’s annual shareholder meeting in 2021.