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.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
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
-
Millions at risk of 'unnecessary' tax bill – how to shield your savingsMillions of Brits could be taxed on their savings interest this year as their savings interest exceeds the personal savings allowance. Are you at risk?
-
Savers will have to wait as long as 48 years to build a £1m cash ISA pot if allowance is cutChancellor Rachel Reeves is rumoured to be planning a cut to the cash ISA allowance in the Autumn Budget, making it harder for savers to build wealth. Will you still be able to build a £1 million cash ISA pot?
