Photo by Matt Cardy/Getty Images
Redrow shares fell on Friday as the homebuilder cut its sales and profit forecasts for the full year.
At 490p per share, Redrow’s share price was down almost 6% on the day.
The FTSE 250 company said it recorded lower-than-expected sales in the 18 weeks to November 3 due to what it described as “a sluggish property market in the autumn”.
He said that “we continue to wait for our [full year] results are expected to be within the guidance range we have given in September 2023, i.e. revenue of between £1.65 billion and £1.7 billion and pre-tax profit of between £180 million and £200 million £.
However, he added that sales and profits would likely be at the lower end of that range.
Pre-tax revenue and profit were £2.13 billion and £395 million respectively in the financial year ending June 2023.
Reservations drop by a quarter
Redrow said the value of net private bookings since the start of the current financial year was down 25% year-on-year, to £384 million. The average selling price for private bookings is down 2.5% over the period, to £471,000.
The number of gross private reservations per point of sale per week fell to 0.49 compared to 0.63 a year earlier.
Redrow’s net booking rate for the 18-week period was 0.36, compared to 0.38 in the first half of the previous financial year. Its cancellation rate increased by 3% to 25%.
Sluggish market
Explaining the recent increase in cancellations, the manufacturer said that “while our customers are generally financially resilient, with 35% of our private customers being cash buyers, many of them are at the top of a purchasing chain “Currently, the chain break rate is high due to difficulties with down-chain mortgages.”
The company’s order book stood at £864 million as of November 3, compared to £1.36 billion in the same period last year.
Redrow said construction cost inflation continues to moderate, but is expected to be around 7% for the full financial year.
Net cash on the carmaker’s balance sheet fell to £125m as of November 3, compared to £182m at the start of November last year. But the company said it still expected to report net cash above £150m by next June.
Chairman Richard Akers said that “after the usual summer slowdown that we reported in our 2023 results announcement, the real estate market remained sluggish into the fall. The company has had to adapt to this more challenging business environment in terms of construction rates and operating costs.
He added that “we are continuing our strategy of delivering our award-winning, high-quality Heritage homes to our target customers.”