Barratt Redrow Upbeat About Home Reservations This Year

BARRATT REDROW plc reports completing 6,846 homes in the second half of 2024, a decrease of 12% on the 7,777 homes completed in in the same period in 2023.

In its latest trading update, the company is upbeat about this year, citing a growing reservation rate, which it says is up 33% compared to the combined performance for Barratt and Redrow in first half of last year.

However, forward sales at 2 February 2025 were 10,903 – around 12% less than the 11,460 homes reserved at the same date last year.

Dividends increased by 25% in HY, 24 and profits in 2025 are expected to be at the upper end of market expectations.

Redrow Integration

The Redrow integration is said to be “progressing well”, with key functions such as Safety, Health and Environment and IT already combined, saving £100m. Nine divisional office closures are underway across both businesses. The integration costs are finalised at £49.9m.

The housebuilder has agreed new joint ventures including The MADE Partnership with Homes England and Lloyds Banking Group; and The West London Partnership with Places for London, the property arm of Transport for London, involving the development of 4,000 homes in the coming decade in West London.

The company says it will require a gross margin of 23% on any land acquisition and return on capital employed will need to be around 25%. It is initiating an ongoing share buyback programme which will return £100m each year, starting with a £50m buyback in HY2,24.

Future Prospects

Barratt Redrow says that while “full year out-turn remains dependent on how the market evolves through the spring selling season, based on solid reservation activity since the start of January, we expect to deliver total home completions of between 16,800 and 17,200 in FY25.”

The business adds that it expects to complete around 22,000 homes each year in the medium term, with an operating margin of approximately 15%.

David Thomas, Chief Executive of Barratt Redrow plc said: “I am pleased with the performance we have achieved in the first half of the year. The integration of Redrow is progressing well and we are on track to deliver at least £100m of cost synergies, £10m ahead of the original target.

“As the economic, political and lending environments have stabilised, there has been some recovery in customer demand and we have seen solid reservation activity since the start of January, building a strong forward sales position. As a result, we now expect our full year adjusted profit before tax will be towards the upper end of market expectations.

“Whilst the housing market remains sensitive to the wider economy and mortgage rates and availability, there remains a significant shortage of homes in the UK. With our scale and track record of delivery, Barratt Redrow is uniquely well positioned to meet this underlying demand and drive continued growth for the benefit of all stakeholders.”

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