It was a case of “Brexit? Schmexit!” for Redrow plc (LON:RDW) as it shrugged off disruptions in the housing market to post sparkling figures.
On the back of a record order book, the house builder also updated its guidance, indicating it expected to deliver turnover of £1.9bn in fiscal 2019, an operating margin of 19.5% and earnings per share of 77p.
The consensus forecast for revenue was £1.69bn. According to Shore Capital, earnings per share of 77p implies profit before tax of £350mln, well ahead of the consensus forecast of £286mln.
The company built 2,459 homes in the second half of 2016, up 13% from 2,178 units in the same period of 2015.
Revenue rose 23% to £739mln from £603mln the year before, while profit before tax soared 35% to £140mln from £104mln.
Broker Liberum said the profit before tax was about 8% higher than it expected.
Net debt at the end of the year was £56mln, down from £139mln at the end of June, giving gearing of just 5%.
The interim dividend has been bumped by 50% top 6p.
“We entered the second half with a record order book, and customer traffic and sales remain robust,” said Steve Morgan, chairman of Redrow.
“Given the strength of our sales position and land holdings our growth strategy is firmly on track, giving me every confidence this will be another year of significant progress for Redrow,” he added.
Shore Capital, which rates the shares as a buy, noted that Redrow had only upped guidance for fiscal 2019, but the broker think this implies “a ramp up across all years, including the current year”.
“Needless to say, trading has been strong but part of the step up in scale will have been due to the acquisition of private house builder Radleigh Homes in the last few days – this has added 1,300 plots of land with potential for 1,200 more from strategic holdings,” said Shore’s Robin Hardy.
The operating margin improved to 19.5% from 18.2% the year before – described by Hardy as “one of the largest increases in margins we have seen recently”.
“Otherwise, sales rates have risen more in line with the competition but the rise in the average selling price (+12%) has been greater (mix and location rather than underlying),” Hardy added.
Shore has cranked up its target price from 475p to 522p.
Shares currently trade at 471p, up 4.1%.