Redrow (RDW) joined in the housebuilding bonanza by reporting a 53 per cent increase in operating profits to £73.6m in the year to June. Legal completions grew by 15 per cent to 2,827 units and average selling prices were up 11.8 per cent at £212,300. In turn, this helped to boost pre-tax margins from 9 per cent to 11.6 per cent, which underpinned a sharp increase in return on capital employed. Shareholders were rewarded with reinstatement of the dividend.
Guidance for a further significant increase in output is expected in the coming year, although chairman and founder Steve Morgan does warn that Redrow's ability to open new outlets - last year these rose from 82 to 92 - will still be restrained by delays in the planning system. Indeed, the company has 16,600 plots locked in the planning system, which, if approved, would deliver approximately 120 additional outlets.
In order to meet the expected increase in output, Redrow increased its land bank by 15 per cent to 14,162 plots, pushing net debt up from £14m to £91m. Average plot costs rose from £50,000 to £57,000, mainly as a result of a higher proportion of family homes.
Subject to review post results, broker Numis Securities forecasts pre-tax profits of £86m for the current year and EPS of 16.8p.
| REDROW (RDW) | ||||
|---|---|---|---|---|
| ORD PRICE: | 236p | MARKET VALUE: | £873m | |
| TOUCH: | 236-239p | 12-MONTH HIGH: | 260p | LOW: 148p |
| DIVIDEND YIELD: | 0.4% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 165p | NET DEBT: | 15% | |
| Year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 302 | -140.8 | -47.9 | nil |
| 2010 | 397 | 0.7 | 0.2 | nil |
| 2011 | 453 | 25.3 | 4.4 | nil |
| 2012 | 479 | 43.0 | 9.7 | nil |
| 2013 | 605 | 70.0 | 14.8 | 1.00 |
| % change | +26 | +63 | +53 | - |
Ex-div: 16 Oct Payment: 15 Nov | ||||
