Redrow PLC (LSE:RDW) said the UK housing market is cooling off due to higher interest rates and inflation, though the housebuilder still hiked its dividend 31% for the year after returning to pre-pandemic levels of profit.
The FTSE 250-listed group said its level of private reservations in the first 10 weeks of the new financial year stood at £360mln, compared to £340mln a year earlier.
For the 53 weeks to July 3, 2022, Redrow reported revenue up 10% at £2.14bn on the back of a 2% increase in completions to 5,715.
The government Help to Buy scheme fell to an 8.6% proportion of reservations in the past year, down from 28% in 2021 as the industry transitions away from the scheme.
Underlying pre-tax profit jumped by 31% to £410mln, while statutory pre-tax profit fell 22% as the company set aside £164mln to cover cladding and fire safety issue
On the outlook, Redrow chief executive Matthew Pratt said after the elevated demand seen over the past two years, partly resulting from people’s changed priorities around working from home, "we are now seeing a return to a more normal market where demand is moderating to historical levels".
The final dividend was increased by 19% to 22p, giving 32p for the year, up 31% on the prior year, with net cash standing at £288mln and the forward company's order book was flat at £1.44bn.
With activity in the new year moderating back to historic levels, the group has narrowed its FY24 guidance, with EPS expected to be over 96p, helped in part by its £100mln share buyback based on current market activity.
Redrow shares rose over 1% to 482.22p in morning trade but are still down 32% in the year to date.