House builder Redrow saw a strong rise in profits in the first half and seems cautiously optimistic about the housing market during the rest of the year.
Pre-tax profit jumped 80% from £8.5m to £15.3m, ahead of expectations of £14m (Panmure Gordon), helped by increased average selling prices, improved margins and lower financial expenses and net financing costs. Gross margins improved from 13.4% to 15.4%.
Meanwhile, revenues rose 8% from £216.1m to £232.8m, exceeding Panmure's £210m estimate. Excluding the sale of the Scottish business in June 2011, like-for-like revenues were 16% higher.
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The average selling prices of Redrow's homes increased from £164,000 to £194,000, while the price of its private homes jumped from £171,000 to £204,000.
"Redrow has again delivered a strong set of results with a significant improvement in performance against the backdrop of a challenging marketplace," said Chairman Steve Morgan.
"Although sentiment remains fragile, I detect increasing confidence in the housing market, particularly amongst first time buyers. This trend should be helped when the availability of up to 95% mortgages kicks in under the NewBuy scheme towards the end of March," he said.
No dividend is being declared, as the group believes it should reach an "appropriate level of earnings" first.
BC
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