Housebuilder Redrow warns of difficult trading conditions in AGM statement

Richard Akers

North West housebuilder, Redrow, warned of difficult days ahead, due to the economic downturn, but reiterated its revenue forecasts for the current financial year.

In an annual general meeting statement this morning, covering the trading period ended November 6, 2022, the Ewloe-based group’s chairman, Richard Akers, will tell shareholders: “We entered the new financial year in a strong position with a record order book of £1.44bn.

“The housing market had returned to normal following the elevated sales rate in the previous two years. However, recent instability in financial markets has had a negative impact on the housing market and the business has had to adapt to the changing economic outlook.”

The value of Redrow’s net private reservations in the first 18 weeks of the financial year was 19% below the prior year at £515m (2022: £639m).

The private revenue per outlet per week was £238,000 compared with £310,000 last year. Private reservations per outlet per week for the period were 0.49 compared with 0.68 last year.

Redrow’s Heritage range of homes, combined with geographical and product mix and general house price inflation, has resulted in the average selling price of the group’s private reservations for the first 18 weeks of the financial year being up 6.9% on the equivalent period last year at £483,000 (2022: £452,000).

In the year to date, the group has operated from an average of 120 outlets, compared with 115 the previous year. Mr Akers said the group expects the average outlets for the full financial year will be 120, in line with the guidance given in September.

The group continues to estimate that overall build cost inflation will be circa seven per cent for the current financial year.

Homes turnover for the first 18 weeks of the financial year was 1.7% above last year at £650m (2022: £639m). The total forward order book at November 6, is £1.36bn, of which 74% is exchanged, compared with £1.49bn at the same time last year, with 73% exchanged.

During the trading period, the group has added 724 plots to its current land holdings (2022: 1,495 plots). Due to the current economic uncertainty, Redrow is being selective and limiting its land buying for the time being.

Mr Akers will tell shareholders this morning: “Given the strength of our order book and the increase in private average selling price, despite the recent reduction in sales rate, we expect our revenue for 2023 to be circa £2.1bn (2022: £2.1bn) and our operating margin to be circa 18% (2022: 19.3%).

“Our balance sheet remains strong and on 4 November 2022, we had net cash of £182m (5 November 2021: £297m). We continue to expect to have net cash of over £150m at the end of June 2023.”

At this morning’s AGM, Nick Hewson will step down from the board after nine years’ service. Mr Akers said: “On behalf of the board, I would like to thank Nick for his valuable contribution throughout his tenure and, in particular, his stewardship of the audit committee, which he chaired. On Nick’s retirement, Nicky Dulieu will take over the role of senior independent director.”

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