Redrow profits up 70%
Housebuilder Redrow has reported a 70% rise in pre-tax profits, thanks to building on land bought cheaply in the downturn.
Group revenue increased 5.8% to £479m for the year to 30 June 2012, driven by a 15% increase in average selling price from £164,800 to £189,900. The average selling price of private homes increased by 17% to £204,100.
Legal completions for the year were 2,458, which is less than the 2,626 built in 2011, but that year included a Scottish operation that has since been sold. Excluding Scotland, the 2011 figure was 2,424 completions.
Gross margins rose from 14.2% to 17.3% due to an increasing proportion of sales being generated from sites purchased since the downturn, the company said.
Redrow also benefited by a greater proportion of homes being from its more expensive New Heritage Collection, which now represents 67% of private sales, up from 35% in 2011.
Reservations this year are running at 16% ahead of the same period last year
Chairman Steve Morgan said: "Redrow has once again delivered a strong set of results with a significant improvement in profitability against the backdrop of a challenging marketplace. Our strategy of focusing on high quality differentiated family housing product is clearly paying off with The New Heritage Collection firmly established as our primary brand accounting for 67% of our private turnover during the year. The average selling price of a New Heritage home is now £215,100, which is a 7% increase on the previous year.
“We have started the new year with reservations per outlet at a similar level to last year. Total private reservations in the first 11 weeks of the financial year are up 16% as a result of a year on year increase on outlets from 73 to 84. We are encouraged by the recent Government Housing and Growth announcement; however the outlook for the industry remains challenging. Supply of mortgages, although slightly improved on last year, remains a significant constraint, as does public confidence due to the country's fragile economic state. Nevertheless, we have an excellent product range and a strong pipeline of new sites, which gives the board every confidence that Redrow will continue along its path of improving performance."
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This article was published on 19 Sep 2012 (last updated on 19 Sep 2012).