Full-year results from Redrow (RDW) quickly crushed any ideas that housebuilders are losing momentum. Transactional volume in pre-owned houses may be falling, but the appetite for new homes remains undiminished.
Redrow added to the previous year’s record results by pushing profits and earnings ahead by a quarter and rewarding shareholders with a 70 per cent increase in the annual dividend payout. Completions rose by 15 per cent to over 5,400, and with a record £1.1bn forward order book, Redrow now expects turnover to reach around £2.2bn by 2020, giving pre-tax profit of £430m, and by then the dividend is expected to have risen to 32p a share.
Greater exposure to the southern part of the UK helped lift average selling prices by 7 per cent to £309,800. Crucially, almost all the legacy land acquired before the financial crash has been used up, and operating margins rose from 18.9 per cent to 19.4 per cent. Strong cash generation also helped to reduce net debt from £139m to £73m. Trading in the new financial year remains robust, with sales up 8 per cent in the first nine weeks.
Analysts at Peel Hunt are forecasting adjusted pre-tax profit for the year to June 2018 of £356m and EPS of 79.5p (from £315m and 69.9p in 2017).
| REDROW (RDW) | ||||
| ORD PRICE: | 639.5p | MARKET VALUE: | £2.36bn | |
| TOUCH: | 639-640p | 12-MONTH HIGH: | 666p | LOW: 367p |
| DIVIDEND YIELD: | 2.7% | PE RATIO: | 9 | |
| NET ASSET VALUE: | 334p | NET DEBT: | 6% | |
| Year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2013 | 0.60 | 69 | 14.6 | 1 |
| 2014 | 0.86 | 133 | 28.3 | 3 |
| 2015 | 1.15 | 204 | 44.5 | 6 |
| 2016 | 1.38 | 250 | 55.4 | 10 |
| 2017 | 1.66 | 315 | 70.2 | 17 |
| % change | +20 | +26 | +27 | +70 |
| Ex-div: | 21 Sep | |||
| Payment: | 10 Nov |
