Bullish Barratt Redrow upgrades full-year profit forecast after jump in interim numbers

Barratt Redrow has said its full-year profit will be towards the upper end of market expectations as it published its first interim results since its £2.5bn merger last summer.

The housebuilder said its adjusted full-year pre-tax profit will now be towards £588m, ahead of the consensus figure of £542m.

In its half-year results for the six months to 29 December, the firm reported a 23% increase in pre-tax profit from £95m to £117m. Turnover was up 11% to £2.2bn.

Barratt Redrow said the merger is on track to deliver £100m of cost savings – £10m ahead of its original target – with nine divisional offices either closing or shut.

The firm said it completed 6,846 homes in the half year, up 11% on the 6,171 for the same period last year.

But this is down on the 7,777 homes that Barratt and Redrow combined built last year. Private home completions fell 6.2% while affordable housing completions dropped 37.8%.

Barratt said it is on track to build between 16,800 and 17,200 homes in the full-year, with the lower end of its estimated range increasing from 16,600 homes. This level of delivery would likely see Barratt unseated as Britain’s biggest housebuilder, with Vistry saying last year it is on course to build 18,000 homes.

Barratt said it expects to deliver around 22,000 homes per year in the medium term, with its operating margin recovering to around 15%. Its adjusted operating margin was 7.2% in the half-year.

David Thomas, chief executive of Barratt Redrow, 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.”