Barratt Redrow trims outlook but full-year profit beats expectations

(Alliance News) - Barratt Redrow PLC on Wednesday reported mixed full-year results with adjusted profit topping guidance, tempered by a reduced outlook for the current financial year.

In response, shares in the Leicestershire, England-based housebuilder, which were weak ahead of the earnings, rose 8.4% to 299.70 pence each in London on Wednesday morning. It was the best performing stock in the FTSE 100 index, which was up just 0.3%. Shares remain down 18% in the past year, however.

Barratt Redrow reported pretax profit of GBP363.5 million for the 52 weeks ended June 28, up 48% from GBP245.3 million on an aggregated basis a year earlier, as revenue rose 6.6% to GBP6.06 billion from GBP5.68 billion.

Aggregated results for the prior year includes the performance of Redrow between July 1 and August 21, 2024, the period within financial 2025 that was prior its acquisition by Barratt, to provide comparability on operational and financial performance.

Adjusted pretax profit before purchase price allocation adjustments fell 7.1% to GBP572.8 million from GBP616.5 million, but was ahead of guidance of GBP559.5 million.

Basic earnings per share improved to 17.1 pence from 13.6p.

Total home completions increased 5.0% to 17,667 from 16,826, in line with the outlook provided the company in July.

For financial 2027, Barratt Redrow lowered completions guidance to between 17,500 and 17,900 homes from 17,700 to 18,200, citing continued planning delays in the UK, and a consequent reduction to expected sales outlet openings.

Barratt Redrow now expects to operate from around 405 sales outlets on average, down from 415 previously.

The company said performance in the year ahead will continue to be influenced by the broader macro-economic environment.

"Higher mortgage rates and affordability pressures will continue to impact customer confidence, but mortgage availability remains competitive and our experience on the ground is that demand from committed home buyers remains resilient," it said.

The underlying net private reservation rate per outlet per week was 0.56 in the financial year, compared with 0.55 for the aggregated performance in the prior year. This has improved further to 0.62 between June 29 and September 6, Barratt Redrow noted.

The company said it has delivered GBP73 million of the target GBP100 million of cost synergies per annum from the Redrow acquisition, with the remaining GBP27 million to be largely delivered in financial 2027. Around GBP53 million of synergies were delivered in the financial year just ended.

In addition, Barratt Redrow said it has also accelerated the progress of revenue synergies, opening 12 synergy sales outlets in financial 2026, ahead of the original timetable.

"Early performance from these developments has been encouraging, reinforcing our belief that bringing together our...complementary brands enhances customer choice and supports sales performance," the firm added.

An additional 18 synergy sales outlets are on track to open in financial 2027, and at least 15 the following year, in line with target to deliver at least 45 additional sales outlets from the Barratt and Redrow land bank portfolios at acquisition.

Barratt Redrow also confirmed capital returns plans, outlined in July.

It intends to make a GBP400 million capital return in financial 2027, including around GBP386 million of share buybacks, and from financial 2028 intends to return 50% of adjusted net income alongside an annual GBP100 million buyback.

The firm had faced pressure from shareholder Phoenix Asset Management Partners which urged the firm to pursue an "aggressive" share buyback programme.

It declared a nominal 1p per share final dividend, down from 12.1p the year prior, taking the total payout to 6.0p, down from 17.6p. The 1p final dividend for financial 2026 makes up the remaining GBP14 million return in financial 2027.

By Jeremy Cutler, Alliance News reporter

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