Barratt Redrow PLC (LSE:BTRW) said following the merger agreed last year it plans to make shareholder returns including £100 million of share buybacks per year based on a new annual 22,000 homes sales target.
The FTSE 100 housebuilder said it expects the growth of the business will generate “significant free cash flow in the medium term”, leading to the plan to resume share buybacks with a £50 million programme in the second half of this financial year.
It will also increase its dividend cover target to 2.0x adjusted earnings (excluding the impact of purchase price allocation - PPA), up from 1.75x from the 2026 financial year.
The interim dividend for the past six months has also been hiked 25% to 5.5p.
Chief executive David Thomas said the integration of Redrow is “progressing well” and the group is on track to deliver “at least £100 million of cost synergies”, £10 million ahead of the original target, and full year adjusted profit before tax, before the impact of PPA adjustments, is now expected to be at the upper end of market expectations.
Results for the half-year to 29 December showed 6,846 houses were sold, up 11%, and based on current reservation activity, total home completions of between 16,800 and 17,200 are expected this year.
First-half revenues of £2.28 billion were up 23% on a pro format basis, with adjusted profit before tax 6.4% to £167.1 million and statutory PBT jumping 23% to £117.2 million. The Redrow acquisition was completed on 21 August, meaning the enlarged business was in place for just over four months.
Net cash stood at £458.9 million at the half-year stage.
“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,” said Thomas, which has led to a forward sales position of 10,903 homes at the start of February, valued at £3.35 billion.