UK’s homebuilder Redrow expects profit slump in fiscal 2024 amid tough housing market
REDROW on Wednesday (Sep 13) said it expected its profit to more than halve in fiscal 2024, after the British homebuilder posted a 4 per cent decline in annual earnings that was ahead of estimates as the country’s housing sector battles a pronounced slowdown.
The latest warning from a British housebuilder comes as concerns about Britain’s economy and rising interest rates, which have pushed up mortgage borrowing and dampened buyer demand, have dented housebuilders’ profits and build targets.
Recent measures of Britain’s property market have shown house prices falling at the fastest pace since 2009, and a decline in mortgage loan demand.
Data from the Bank of England, which has raised interest rates 14 times since December 2021 in an effort to tame inflation, showed the value of residential mortgages in arrears jumped to the highest level in seven years in the three months to June.
“Whilst the market did partially recover in spring 2023, the further rise in mortgage rates combined with the cost of living crisis means the market remained subdued,” chairman Richard Akers said in a statement.
Shares in the company slipped 1.7 per cent in early trade.
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“Redrow’s FY23 results provide a reassuring statement. The skew in completions and margins for the start of calendar of 2024 implies we may need to wait for the ‘turn’ in earnings reported, but perhaps that we are nearer the turn in expectation,” analysts at Jefferies wrote in a note.
The FTSE 250 firm forecast profit before tax in the range of £180 million (S$306 million) to £200 million for fiscal 2024.
The Wales-based builder, which constructs bigger houses than rival housebuilders and sells the homes to second or third-time movers, posted underlying profit before tax of £395 million for the full-year ended Jul 2, compared with company-compiled analysts’ consensus estimates of £367 million. REUTERS
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