Housebuilder Barratt Redrow has seen shares jump higher after delivering profit cheer thanks to a buoyant start to the year as buyer demand recovers. The group flagged “solid reservation activity” since the beginning of January and now expects to sell between 16,800 and 17,200 homes over the year to the end of June. Shares in the building giant leaped 8% higher in Wednesday morning trading as it said annual profits are now expected to be towards the top end of forecasts.
As the economic, political and lending environments have stabilised, there has been some recovery in customer demand and we have seen solid reservation activity since the start of January. Barratt, which completed its £2.5 billion takeover of Redrow last October after getting approval from the competition watchdog, said it also expects to strip out a further £10 million in costs following the deal, taking the total in savings to £100 million.
It said: “As the economic, political and lending environments have stabilised, there has been some recovery in customer demand and we have seen solid reservation activity since the start of January, building a strong forward sales position. “As a result, we now expect our full-year adjusted profit before tax will be towards the upper end of market expectations.”. But it added that the housing market “remains sensitive to the wider economy and mortgage rates and availability”.
The upbeat full-year profit outlook came as it reported a 6.4% rise in underlying pre-tax profits to £167.1 million for the first half to December 29. Barratt revealed earlier this year that, following its takeover of Redrow, around 10% of the 8,300-strong combined workforce, or about 800 jobs, would go. The cost-cutting will see it shut nine divisional offices across the merged business. It added that the company is also reducing its overall workforce through a “continuing recruitment freeze”.
