Shares in Redrow fell on Friday trading as the housebuilder scaled back its sales and profits guidance for the full year.
At 490p per share, Redrow’s share price was down almost 6% on the day.
The FTSE 250 company said that it experienced lower-than-predicted sales during the 18 weeks to 3 November due to what it described as “a subdued Autumn housing market.”
It said that “we continue to expect our [full year] results to be in the guidance range we gave in September 2023 of revenue between £1.65 billion and £1.7 billion and profit before tax of between £180 million and £200 million.”
However, it added that sales and profits are likely to be at the lower end of this range.
Revenues and pre-tax profits came in at £2.13 billion and £395 million respectively during the financial year ending June 2023.
Reservations Fall By A Quarter
Redrow advised that the value of net private reservations since the start of the current fiscal year were down 25% year on year, at £384 million. The average selling price of private reservations was 2.5% lower over the period, at £471,000.
The number of gross private reservations per outlet per week, meanwhile, dropped to 0.49 versus 0.63 a year earlier.
Redrow’s net reservation rate for the 18-week period came in at 0.36, down from 0.38 in the first half of the prior financial year. Its cancellation rate ticked 3% higher to 25%.
Explaining the recent increase in cancellations, the builder said that “whilst our customers are generally financially resilient, with 35% of our private customers being cash buyers many of them are at the top of a house purchase chain. Currently the rate of breakdown of chains is elevated because of difficulties with mortgages lower down the chains.”
The company’s order book stood at £864 million as of 3 November, down from £1.36 billion at the same time last year.
Redrow said that build cost inflation continues to moderate, but is expected at around 7% for the full financial year.
Net cash on the builder’s balance sheet fell to £125 million as of 3 November, down from £182 million as of early November last year. But the firm said it still expects to report net cash of above £150 million by next June.
Chairman Richard Akers said that “following the usual summer slowdown we reported in our 2023 results announcement, the housing market has remained subdued through the Autumn. The business has had to adapt to this more difficult trading environment in terms of build rate and operating costs.
He added that “we continue with our strategy of delivering our high quality, award winning Heritage homes to our target customers.”