Housebuilder Redrow PLC (LON:RDW) raised its full-year dividend by 65% after achieving record results as low interest rates and the government’s Help to Buy scheme supported demand.
In the year to June 30, pre-tax profit rose 21% to £380mln compared to a year ago and revenue grew 16% to £1.92bn, driven by an increase in legal house completions and the average selling price of homes.
The number of legal home completions, including joint ventures, gained 9% to 5,913 units and the average selling price rose 7% to £332,300.
The company ended the year with an order book, excluding joint ventures, worth £1.1bn, up 10% on the previous year.
READ: Redrow pumps up the dividend after record number of half-year completions
Operating margins rose to 19.9% from 19.4% last year on the back of tight cost control.
Redrow declared a final dividend of 19p per share, taking the full year dividend to 28p, after ending the period with net cash of £63mln compared to last year’s net debt of £73mln.
Brexit and Help to Buy uncertainty
“We have a very strong forward order book, first class land holdings, an excellent balance sheet and we are able to react quickly to changing circumstances,” said chairman Steve Morgan.
“However, there is no doubt that clarity over Brexit and the future of Help to Buy would improve market sentiment. Given that clarity, we will continue to deliver."
The housing market has slowed since the UK voted to leave the European Union while the government is reportedly considering ditching Help to Buy due to worries it is pushing up house prices and helping wealthy people upgrade their homes.
Shares rose 1.5% to 565p in morning trading.
Liberum remains bullish on Redrow
Liberum maintained a 'buy' rating and target price of 700p on Redrow.
"Redrow has announced full year pre-tax profit up 21% to £380m, beating consensus by 4%, with the beat coming from volume, price and margin in equal measure," the broker said.
"The shares trade at a significant discount to the sector, on 6.0x calendar 2019E PER (price-earnings ratio) compared to the sector on over 8x and 1.1x book value compared to the sector on 1.7x."