Housebuilding giant Barratt Redrow has announced a significant jump in profit in the wake of Barratt’s acquisition of Redrow last year.
Home completions rose 10.4 per cent to 6,864 in the six months ended December 29, while revenue rose 23.2 per cent to £2.28bn.
“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,” chief executive David Thomas said.
Barratt Redrow expected its full year adjusted profit before tax to be towards the upper end of market expectations.
The merger between Barrett and Redrow, which was officially given the green light last September, is expected to deliver cost savings of around £100m, above expectations.
The combined firm has laid out plans to build 22,000 homes a year in the medium term. That would make it one of the UK’s largest house builders.
Gross profit at the firm rose 42 per cent to £338m, while earnings per share dropped 18.3 per cent to 5.8p.
The change in earnings per share was largely due to the increase in average shares in issue following the acquisition of Redrow.
Firm ‘well-placed’ to drive construction growth
Compared to the average European country, Britain today has a backlog of 4.3m homes that are missing from the national housing market, according to the Centre for Cities.
As a result, demand has vastly outpaced supply, leading to homes becoming increasingly unaffordable when compared to incomes.
The average first-time buyer has a monthly mortgage payment equivalent to 36 per cent of their take-home pay – well above the long-run average of 30 per cent, according to the Nationwide Affordability Survey.
“Whilst the housing market remains sensitive to the wider economy and mortgage rates and availability, there remains a significant shortage of homes in the UK,” Thomas said.
“With our scale and track record of delivery, Barratt Redrow is uniquely well-positioned to meet this underlying demand and drive continued growth for the benefit of all stakeholders,” he added.