In the 53 weeks to 3rd July 2022 Redrow completed 5,715 new homes (2021: £5,620) generating revenue of £2.14bn and pre-tax profit of £246m.
Revenues were 10% ahead of the previous year (2021: £1.94bn) and also £300m ahead of the previous record year of 2019 (£2.11bn).
Pre-tax profit was down on 2021’s £314m result because of an exceptional charge of £164m and a non-exceptional charge of £10m related to fire safety remediation work, having signed the government’s building safety pledge in April.
Underlying profit before tax was up 31% on the year to £410m, which was also back to the pre-covid record level (2019: £406m).
The year also saw strong cash generation with net cash at 3rd July 2022 of £288m (June 2021: £160m).
Chairman Richard Akers said: “Given rising inflation and higher interest rates it is not surprising the buoyant housing market has moderated recently and demand has returned to historically average levels. It is on this basis we have prepared our medium term plan and we are confident our timely investment in land, combined with strong demand for our Heritage homes, will support our continued growth. In addition, our opening order book of over £1.4bn has put us in an excellent starting position for the 2023 financial year. As a result, the business is well placed to deliver another set of strong results.”
Chief executive Matthew Pratt had a pop at the ongoing political turbulence: “The housing industry is subject to intense government pressure and a rapidly moving regulatory agenda,” he said. “The upheaval in Westminster, with another recent change of housing minister, is unhelpful. This is particularly the case in an industry which benefits from a long-term strategic approach to housing.”
However, he remains optimistic for the new-build housing market. “The fundamentals of the market remain good. Interest rates, despite recent increases, are at historically low levels; mortgage availability is very good and employment levels are strong.
“We are well aware of the challenges of the increasing cost of living. It’s clear our quality new homes will have a growing and additional point of differentiation from the second hand market around energy efficiency.”
Charlie Huggins, head of equities at Bristol-based investment service Wealth Club, commented: “House prices have proved remarkably robust since the pandemic struck, buoyed by pent-up savings and cheap mortgages. Redrow, like other house-builders, has gushed cash in this environment and is earning huge margins to boot.
“Redrow’s premium quality housing is resonating strongly in the current environment, with the ‘race for space’ supporting demand for larger, family homes. But, make no mistake – the biggest reason for Redrow’s success is high house prices, and the general strength of the housing market.
“That is something over which it has no control, and the big bad wolf of recession could be about to blow away the good times.
“Increasing house prices in recent years mean home buyers are having to borrow more to get on the housing ladder. Combine that with rising interest rates, which ultimately mean more expensive mortgages, and the affordability of property could fall substantially. If interest rates keep rising, it’s hard to see how the housing market would be immune.
“This is the kind of environment where you find out which house-builders have built their success on a base of bricks, and which are about to have their sticks and straw blown away by.”