Shares in Barratt Redrow rose 6% to 291p in early trading on Wednesday after the UK's largest housebuilder delivered full-year profits that came in ahead of City expectations, even as brokers cautioned that the year has begun slowly.
Adjusted pre-tax profit, stripped of one-off costs from the Redrow takeover, slipped 7.1% to £572.8 million as thinner margins offset a rise in home sales.
That still beat forecasts, with Stifel noting the figure landed comfortably above the £553 million consensus and its own £555 million estimate.
The company built 17,667 homes over the 52 weeks to 28 June, up 5% and towards the top of its guidance range, while revenue climbed 6.6% to £6.06 billion.
Statutory pre-tax profit, which captures the full cost of the deal, jumped 48% to £363.5 million as those integration charges faded.
Margins were the weak spot, with the adjusted operating margin dipping to 9.9% from 10.5%, squeezed by build cost inflation that outpaced barely-there selling price growth.
The picture for the new year is softer.
Barratt Redrow reported a private reservation rate of 0.53 a site a week since 1 July, around 4% down on last year, and trimmed its completions guidance to a range of 17,500 to 17,900, blaming planning delays for holding back new sales outlets.
Both Stifel and Peel Hunt expect margins to stay under pressure in the year ahead, with build costs running 3% to 4% higher and incentives likely to remain heavy.
Peel Hunt, which rates the shares 'add' with a 310p target, said the update implied further, if modest, cuts to forecasts, while warning that outright house price falls would force bigger revisions.
Stifel was more guarded, sticking with a 'hold' rating and a 290p target.
It called Barratt Redrow an industry leader on quality and customer service but argued the valuation was not compelling enough, with the shares trading at about 0.63 times book value, close to their lowest since 2012.
Better performance, Stifel added, hinges on steadier borrowing costs and calmer energy prices rather than anything within the company's control.
The integration of Redrow, acquired in 2024, is now complete, with £73 million of a targeted £100 million in annual savings banked, and Barratt Redrow closed the year with net cash of £773 million.
That balance sheet strength underpins a £400 million shareholder return for the year ahead, the bulk of it through a roughly £386 million share buyback.
The results also mark a farewell for chief executive David Thomas, who retires after a decade in charge and hands over to Dean Banks on 21 September.
