Redrow PLC (LSE:RDW) plans to slash its dividend as it predicted profits could halve in the coming financial year as rising mortgage rates take their toll on the housing market.
The housebuilder forecast revenue in the new financial year of £1.65-1.7 billion, pre-tax profit of £180-200 million and a dividend of 14p per share.
The firm said it was basing this guidance on a sales rate in line with financial year 2023 of 0.46 per outlet per week.
Redrow said the sales market over the summer has been “challenging”, which resulted in sales per outlet per week for the first 10 weeks of the new financial year of 0.34, down from 0.61 the year before.
Matthew Pratt, chief executive, said: “Cost of living and mortgage affordability continue to have a negative impact on the market.”
The news came as the FTSE 250-listed firm reported results for the year to 2 July 2023.
Revenue was flat at £2.13 billion compared to £2.14 billion the year before, while pre-tax profit rose to £395 million from £246 million.
A final dividend of 20p was paid, taking the total payout to 30p, down from 32p the year prior.
Redrow said: “Reflecting the macro-economic picture and the tougher sales market, our average private reservation rate per week for the year was 0.46 compared to 0.68 in 2022.”