Redrow heralds record sales and profits after saving on dividend
HOUSEBUILDER Redrow posted record sales and profits in the first half of the year thanks to the government’s Help to Buy scheme, a rise in house prices and strong demand for new homes.
Group revenue in the six months to 31 December jumped by 54 per cent to £560.6m, driven by an 18 per cent rise in home completions to 1,850 and a 14 per cent increase in the average selling price to £300,000.
This helped drive a 92 per cent leap in profits to £91.2m.
Chief executive Steve Morgan said it owed its success to ploughing money back into the business, rather than paying out large dividends.
“Whereas a number of companies have been giving money back to shareholders, we haven’t,” he said. It did, however, double its interim dividend to 2p a share.
Redrow’s London division contributed £145m of sales compared with £41m last year, boosted by the £46.8m sale of its interests in One Commercial Street, a luxury scheme near Aldgate East tube station.
The London business, which was established in 2010, thrived last year thanks to the capital’s booming property market, with most of its sites including two developments in Kingston selling out.
This, together with the launch of Help to Buy in the same period the previous year meant reservations in the first half were just 24, compared to 138 last year. However, private reservations excluding London rose by eight per cent to £428m.
Morgan said changes to the stamp duty reforms had brought about “a fairer system” and would help homebuyers within its market.
On the impact of the upcoming General Election, Morgan said: “When you have got a policy by all the major parties to grow housebuilding, I don’t really see much effect on our business. The worse thing that could happen is if there is a hung parliament and if there is a lot of indecision that hung parliaments can bring.”