Redrow posts 17% rise in profits but housebuilder warns new residential property developer tax could dent future earnings
- The FTSE 250 company netted pre-tax profits of £203m in 27 weeks to 2 January
- Redrow raised 2024 revenue outlook by £100m-£200m from £2.2bn guidance
- But 4% RPD tax from April one of firm’s ‘principal risks and uncertainties’
Redrow saw a 17 per cent in interim profits over the fast half of its financial year, but the British housebuilder has warned that the new residential property developer tax will hit future earnings.
The FTSE 250 company, which mainly builds standalone houses, said profit before tax for the 27 weeks to 2 January was £203 million.
It also raised its 2024 revenue outlook by £100-200million from the £2.2billion guidance provided in September last year.
British housebuilder Redrow reported a 17% rise in interim profits but it has warned that the new residential property developer tax will hit future earnings
However, it highlighted the 4 per cent Residential Property Developers Tax (RPDT), which comes into effect from April, as one of its ‘principal risks and uncertainties’ facing the business.
The new tax was announced by the previous Secretary of State for Housing, Communities and Local Government, Rt Hon Robert Jenrick MP, last February and forms part of the government’s ‘Building Safety Package’. It aims to bring an end to unsafe cladding, provide reassurance to homeowners and support confidence in the housing market.
It will apply to the largest residential property developers on the profits they make on UK residential property development, with revenues used to fund the removal of unsafe cladding.
That being said, Redrow CEO Matthew Pratt appeared upbeat about the housebuilding market going forward.
Commenting on the interim results he said: ‘Redrow continued to perform strongly in the first half, delivering record revenue for the period, which demonstrates the ongoing success of our strategy.
‘Our premium quality product is more in demand and attractive to customers than ever before and is perfectly suited to accommodating the blending of family and work life that many of us are experiencing.’
He added that the company had made a positive start to the second half and is delivering against its strategy.
Pratt said that by continuing to evolve the firm’s ‘highly successful’ Arts & Crafts style Heritage Collection, Redrow had ‘capitalised on strong demand, improved sales margins and continued to invest for growth’.
The value of its first half reservations was £884million, an increase of 6 per cent on the same period last year (2021: £836 million), and the total order book increased to £1.5billion (2021: £1.3billion).
In the five weeks to 6 February, private reservations in terms of value averaged £417,000 per outlet per week and £367,000 excluding a bulk deal in London (2021: £301,000).
The firm has also appointed a leadership team for its new Southern division, which will open this summer and is currently acquiring its first sites.
In terms of customer satisfaction, the group revealed it scored 93.7 per cent in the latest National House Building Council eight-week quarterly survey, with each one of the divisions achieving a five star score.