Deeside based Redrow predicts profit drop amid housing struggles; High mortgage rates stifle sector
Deeside-based Redrow expects its profits to halve next year due to rising mortgage rates impacting the housing market.
In an update this week, the Ewloe headquartered housebuilder said it expects a pre-tax profit of £180mn-£200mn for the year ending June 2024, a sizable drop from their recent profits.
Other housebuilders are also expecting things to get worse. Earlier hopes of more house sales in the summer faded when mortgage rates went up again in June.
Redrow shared its yearly results, highlighting a big 61% increase in its pretax profit to £395 million. This is up from £246 million the year before.
The main reason for this big profit increase is that the cost of building houses rose faster than house sale prices.
But even with this big profit, the money the company made (revenue) went down a tiny bit by 0.5%. It was £2.13 billion, down from £2.14 billion the year before.
Shareholders will get a smaller payout this year. Redrow said they will give a final payout (dividend) of 20.0 pence per share. This is 9.1% less than the 22.0 pence the year before.
So, the yearly dividend is now 30.0p for each share, 6.3% down from 32.0p the previous year.
Redrow’s boss, Matthew Pratt, talked about the bigger picture. He said, “The cost of living and the high prices of mortgages are problems in the housing market.”
“But we have special sales offers to turn people’s interest into actual bookings.”
“With recent changes in the Bank of England’s rates, we hope mortgage rates will become more stable as inflation slows down.”
“This stability is really important for people wanting to buy houses. It gives them confidence about their money when they’re buying.”
After these updates, Redrow’s shares went up by 5% on Wednesday, to 504p each.
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