Morgan upbeat as Redrow revival continues

Deeside-based national housebuilder Redrow reported a pre-tax profit of £8.5m for the six months to December 2010 compared to an £8.7m loss a year earlier.

Revenues were up 15% to £216.1m and the average private selling price was up 16% to £170,500. Gross margin increased to 13.4% from 7.2% as a result.

Net debt at 1 December 2010 stood at £51.5m compared to £49.3m the year before, equivalent to gearing of 12% (Dec 2009: 11%). No dividend was declared for the first half.

Steve Morgan, chairman of Redrow, said: "Redrow continued to make good progress in the first half of the financial year, against the backdrop of a housing market overshadowed by economic uncertainties, tax rises and government cutbacks.

"In spite of the challenging conditions, Redrow's decision to return to our traditional values with the introduction of the New Heritage Collection proved to be a great success for the business. Redrow has been transformed over the last two years. The New Heritage Collection is proving to be an aspirational product for our customers and it has undoubtedly played a major part in repositioning the Redrow brand and lifting the group's margins.

"While it is still too early to call the spring market the second half has started encouragingly with reservations during the first six weeks comfortably ahead of the same period last year. These figures must be treated with a degree of caution however as they undoubtedly include some catch up from the December freeze. Looking ahead, house prices have been stable for some considerable time now and we do not share the pessimism of some commentators that there will be a major fall in house prices during the coming year.

"Given the improved quality of our land bank, the roll out of the New Heritage Collection and the unquestionable housing shortage, I feel that Redrow is in good shape to continue to make progress."

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As the country faces an acute and sustained housing crises, Britain’s dis-functional house building industry continues to produce cheap-to-build but expensive-to-buy houses in small numbers with enormous mark-up to maintain profitability. Such is the luxury of enormous land banks, massive unsatisfied demand and practically zero competition. And what kind of frippery is a "new heritage collection"? This looks like the same uninspiring nonsense the industry has been churning out for decades.

By A_Noun

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