Sentiment towards the housing sector may have been affected by Brexit uncertainty and worries about higher interest rates and affordability, but Redrow (RDW) has shown that the new-build sector is alive and well.
All the key operating metrics showed a further improvement, with profits up more than fifth to a record high, and operating margins up from 19.4 per cent to 19.9 per cent. Return on capital employed rose from 26 per cent to 28.5 per cent and the final dividend was hiked by nearly two-thirds. Average selling prices rose by 7 per cent to £332,300, more than enough to offset build cost inflation of around 4 per cent. Most of this reflected higher material costs and, crucially, there were signs of easing labour cost pressures.
Sales in the first nine weeks of the current financial year were flat from a year earlier, which was respectable given the effects of the hot weather and the World Cup, while the forward order book remained 10 per cent ahead of the previous year at £1.1bn.
Analysts at house broker Peel Hunt marginally upgraded their pre-tax profit and EPS forecasts for the year to June 2019 to £406m and 91.1p, respectively.
REDROW (RDW) | ||||
ORD PRICE: | 565.5p | MARKET VALUE: | £2.09bn | |
TOUCH: | 565-565.5p | 12-MONTH HIGH: | 674p | LOW: 514p |
DIVIDEND YIELD: | 5% | PE RATIO: | 7 | |
NET ASSET VALUE: | 401p | NET CASH: | £63m |
Year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
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 |
2018 | 1.92 | 380 | 85.3 | 28 |
% change | +16 | +21 | +22 | +65 |
Ex-div: | 20 Sep | |||
Payment: | 13 Nov |