Barratt and Redrow profits down on day merger between pair announced

Rival housebuilders Barratt and Redrow have both reported reduced revenue and profit on the day a merger between the two was announced.  

Barratt, which is set to acquire Redrow in a deal worth £2.5bn, posted income of £1.85bn in the half year to December 2023, a third down on the same period the year prior. 

Pre-tax profit was also down 81% from £502m to £95m, partly owing to adjusted items relating to costs associated with legacy properties, which were estimated to have cost £62m. 

Barratt said its full year outturn would depend on “how the market evolves” through the spring but said it expected total completions between 13,500 and 14,000. 

“Since the start of January, we have seen early signs of improvement in both reservation rates and buyer sentiment, helped by expectations of lower interest rates and the introduction of more competitive mortgage rates,” said Barratt chief executive David Thomas. 

Redrow, the smaller of the pair, also saw its revenue cut to £756m in the half year to December 2023, compared with £1.03bn in the same period the previous year. 

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Its pre-tax profit dropped to £84m from £198m. For the full year, the firm is anticipating revenue between £1.65bn and £1.7bn and underlying pre-tax profit of between £180m and £200m. 

Matthew Pratt, group chief executive at Redrow, said recent improvements in mortgage approvals and reduced mortgage rates had “improved homebuyer confidence and raised the prospects of a return to a more stable sales market”.