House builders are in a pretty sweet spot at the moment, but Redrow's (RDW) barn-storming first-half performance puts it in a different league. Turnover rose by a half, while operating and pre-tax profits almost doubled. The targeted 20 per cent return on capital employed was achieved two years ahead of target. Small wonder the shares rose 12 per cent on these numbers.
Average sales outlets rose from 93 to 101 (with 115 targeted for June), which helped lift completions by 18 per cent to 1,850. This included a 30 per cent increase in private legal completions to 1,654, where average selling prices rose 14 per cent to £300,000. This partly reflected a strong performance from the relatively new London trading division, where revenue jumped from £41m to £145m. That includes £46.8m from the sale of its commercial units at One Commercial Street, a 21-storey tower above Aldgate East tube station.
While construction costs were higher, these were more than offset by higher selling prices, driving operating margins up from 13.5 per cent to 17 per cent. Chairman Steve Morgan says inflation in both house prices and build costs have "moderated to sustainable levels" this year.
Analysts at Numis have upgraded their estimates for the current year and 2016 by 15 per cent and 7 per cent respectively. They now expect pre-tax profits this year of £185m and EPS of 39.9p, rising to £217m and 47.2p in 2016.
| REDROW (RDW) | ||||
|---|---|---|---|---|
| ORD PRICE: | 322p | MARKET VALUE: | £1.19bn | |
| TOUCH: | 322-323p | 12-MONTH HIGH: | 353p | LOW: 224p |
| DIVIDEND YIELD: | 1.2% | PE RATIO: | 8 | |
| NET ASSET VALUE: | 207p | NET DEBT: | 18% | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 363 | 47.5 | 9.7 | 1 |
| 2014 | 561 | 91.2 | 19.9 | 2 |
| % change | +54 | +92 | +105 | +100 |
Ex-div: 05 Mar Payment: 01 May | ||||
