Housebuilder Redrow pre-tax profit down 35%

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by Kay Murchie

Redrow posted a 35% fall in half-year pre-tax profits and said the markets in which it operates remained ‘clearly’ challenging.

The housebuilder, based in Flintshire, said pre-tax profits from continuing operations for the half-year to the end of December slumped to £35.8 million from £54.7 million.

Total house sales for the period were 2,111, down 4.7% year-on-year. Redrow warned it expected volumes to drop 10% for the full year to June 30.

Broker Landsbanki described Redrow as a ‘weak player in a tough market’ and suggested the firm was open to a takeover.

Earlier this week, rival housebuilders Persimmon posted record profits for last year while Barratt Developments said half-year, pre-tax profits increased by 10% to £194.6 million.

Analyst Simon Brown said Redrow’s sales for the first 7 weeks of 2008 were down 35% year-on-year a ‘markedly poorer’ situation than its main competitors. With the number of outlets staying at 108 sites, the group is unlikely to improve its position ahead of a general market recovery, the analyst added.

Redrow added that the average selling price achieved for its main Homes division was flat during the 6 month period, at £162,800. Revenues for the unit slumped to £319.1 million from £359.6 million.

Alan Bowkett, Redrow’s group chairman, said visitor levels picked up in the new year, but that sales were being affected by tightening mortgage availability. Our overall expectation remains that 2008 will present a more difficult trading environment than the industry has experienced for many years with lower levels of confidence in the housing market, added Mr Bowkett.

Shares in Redrow have fallen approximately 40% in the last 6 months.