Redrow rallies after profits rise

The homebuilder is up 3% this morning after reporting a 63% increase in full-year profit.

Redrow announced an annual pre-tax profit of £70 million, which compares with £43 million last year. Analysts were expecting profit to be between £52 and £70 million, so the figure came in at the top end of estimates. The firm also reported full-year revenue of £604.8 million, and this is 26% higher than the previous year.

Chairman Steve Morgan stated that business is returning to ‘normal’ levels, and the new financial year has got off to a good start with reservations up 54%. The government’s help-to-buy scheme has assisted Redrow and other homebuilders, as it makes it easier for first-time buyers to get on the property ladder on the proviso that they buy a new property.

Redrow’s net debt position has risen from £14 million in 2012 to £91 million in 2013. This jump is due to large-scale investment in land, and if the net debt keeps rising it may become a concern for shareholders. The homebuilder has reinstated its dividend policy, and one penny per share will be paid to each shareholder. It is not much, but it is a positive sign.

Redrow plc chart

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.