Redrow offers bumper dividend after 124% surge in profits

Redrow offers bumper dividend after 124% surge in profits but the builder for the average home buyer highlights cooling housing market

  • Redrow profits grow three-fold to £314m in the year to 27 June 2021
  • Having cut payouts in 2020, it declared a final dividend of 18.5p per share
  • Now reintroduced forecasts predict revenues of £2.2bn in 2024
  • Housebuilder expects sales to return to a more normal trend by the end of 2021

Homebuilder Redrow saw a 124 per cent surge in pre-tax profit in the year to 27 June of £314million.  

The developer, which specialises in medium-sized homes and targets the average buyer, reported that it had grown revenues from £1.34billion to £1.94billion over the past year.

That narrowed the gap to its pre-Covid income to just 8 per cent.

But Redrow also warned that the UK’s soaring housing market has been cooling in recent months and it now expects home sales should return to a more normal trend by the end of 2021. 

Redrow marked a highly profitable financial year by declaring a final dividend of 18.5p

Having delivered no dividends to shareholder in 2020, as swathes of UK companies were forced to suspend payouts, Redrow declared a final dividend of 18.5p per share.

Redrow said it had been buoyed by ‘encouraging trading since the start of the new financial year’, while mounting building costs felt across the sector were ‘more than offset’ by house price inflation.

The normalisation of trading has enabled the company to resume medium-term revenue forecasts, with Redrow estimating revenues of £2.2billion in 2024.

Notably, Redrow also reversed an opening net debt position of £126million to end the year with net cash of £160million, after making a significant investment in new land, thereby enabling its bumper dividend.

Redrow’s encouraging forecasts prompted analysts at Peel Hunt to up its target price from 830p to 900p, commenting that the Redrow’s share price, which was flat today at 696.8p, offers ‘some of the best upside in the sector’.

The UK’s property sector has been supported by a temporary Covid-19 tax breaks for homebuyers, but has showed signs of moderating since a phasing out of the benefit began in June.

‘The buoyant housing market has moderated in recent months and we anticipate sales rates will return to historically average rates over the course of the current financial year,’ Redrow Chairman John Tutte said in the company’s annual earnings statement.

‘It is on this basis we have planned for the future and we are confident our timely investment in land, combined with strong demand for our Heritage homes, will support our longer-term growth aspirations.

‘Additionally, our record order book also provides us with an excellent platform for the future with over £1.3billion of revenue already secured for the current financial year. As a result, the business is well-placed to deliver another set of strong results.’

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