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Redrow PLC on Wednesday raised its dividend but saw annual profit decline as it booked one-off costs related to a UK government pledge surrounding fire safety measures.
For the 53 weeks that ended July 3, revenue rose 10% to £2.14 billion from £1.94 billion.
However, pretax profit fell 22% to £246 million from £314 million after booking exceptional fire safety costs of £164 million.
Redrow signed a UK government pledge in April this year, aiming to ensure the safety of high-rise buildings.
The Building Safety Pledge programme was established by the UK government in the wake of the Grenfell Tower fire in 2017 to make sure that residents of high-rise buildings are safe by removing combustible materials, such as cladding. The pledge commits housebuilders to new guidelines for work on potentially unsafe cladding on buildings between 36 feet and 59 feet high.
Excluding these costs, underlying pretax profit rose 31% to £410 million.
Administrative expenses increased by 9.7% to £102 million from £93 million due to ‘cost inflation in the second half of the year and the increased investment in the Southern division’, the firm explained.
Underlying operating profit amounted to £414 million compared to £321 million a year earlier, representing a ‘return to the pre Covid-19 record levels achieved in 2019’, it said. In 2019 operating profit was £411 million.
Non-Executive Chair Richard Akers said: ‘I am delighted to report a year of strong growth which has resulted in our underlying profits returning to the record levels achieved in 2019 prior to Covid. Revenue increased by 10% to £2.14 billion and underlying profit before tax was up 31% year on year, both ahead of our pre-Covid 2019 figures.’
Redrow raised its final dividend to 22.0p, up 19% from 18.5p the year before. This took its total payout for the year to 32.0p, up 31% from 24.5p a year prior.
Redrow said it won £1.82 billion of net private reservations during the period, compared to £1.79 billion the year prior. This brought the total order book for the year to £1.44 billion, up marginally from £1.43 billion a year earlier.
The firm said its order book has placed it in an ‘excellent’ starting position for the new financial year.
It added, however: ‘Given rising inflation and higher interest rates it is not surprising the buoyant housing market has moderated recently and demand has returned to historically average levels.’
Looking ahead, Redrow said in the first 10 weeks of financial 2023, demand has moderated to historic levels. The value of private reservations was £360 million compared to £340 million the year before.
The company added that its revenue per outlet per week continued to be at a market leading level of £296,000 compared to £294,000 the year before.
Redrow shares were up 1.7% at 484.20 pence each on Wednesday morning in London.
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