Redrow profits plummet on site closures, costs

The Deeside-based housebuilder posted a 66% drop in annual pre-tax profit to £140m from £406m a year earlier, as it grappled with falling revenues and rising costs associated with the Covid-19 pandemic.

The company said, however, that it would resume dividend payouts in 2021 and had begun the new financial year in a “strong position” with an uptick in new orders and project completions.

Redrow reported a 37% drop in annual revenues to £1.34bn for the financial year ended 30 June, according to a stock exchange filing.

It attributed the slide in revenues and associated profit drop to a 37% year-on-year reduction in home completions during the pandemic-hit second half of the period, as well as higher costs from the temporary closure of its developments in March, and impairment costs.

The company completed 4,032 homes in the full year ended June 30, compared with 6,443 in the previous year.

However, debt was “tightly managed” during the period as part of measures to protect cash flow, Redrow added. The company said in April it would receive £100m of additional debt funding to help it weather the effects of Covid-19 following negotiations with its six relationship banks.

It was also confirmed as eligible for the Government-backed loan scheme, the Covid Corporate Financing Facility, with a £300m limit.

Redrow furloughed 80% of its staff, it added in April, and decided to delay the planned retirement of its executive chairman, John Tutte.

The latest annual results show that new orders were up 39% as of 30 June, to £1.42bn from £1.02bn in 2019, and reservations for the first 11 weeks of the new financial year are up 12% year-on-year to £416m.

Tutte said in a statement today: “The Covid-19 pandemic had a profound impact on the group’s performance in the 2020 financial year but we entered the new financial year in a position of strength.

“We have a record order book and brought forward very high levels of work in progress. This was due in part, to increased investment earlier in the year in anticipation of strong demand for the Help to Buy scheme ahead of changes to the scheme next year.”

He added: “The group is well-placed to deliver a robust performance. We have completed substantially more homes in the first few weeks of the new financial year than during the comparable period last year while maintaining a record order book.

“This, combined with reduced investment in London, will deliver strong operating cash flow over the coming months to support our regional growth plans and, subject to market conditions, allow dividend payments to resume in 2021.”