Covid-sized leak in roof for Redrow
SHARES in housebuilder Redrow took a hit as the group warned on trading and announced plans to beat a retreat from London. Following a review of its divisional businesses, the FTSE 250 group will scale back its operations in the capital to target future growth in its regional operations.
It warned site closures prompted by Covid 19 have had a “profound impact” upon its results, predicting its turnover for the the year to the end of June will be £1.24bn, down from £2.11bn the previous year. “The prospects for the wider economy and its impact upon the new homes market remains uncertain,” the group warned in an update to the City yesterday.
“Despite this, as lockdown restrictions have eased, trading has been encouraging, driven by high customer demand for Help to Buy as more buyers look for support as the mortgage market and economy recovers.”
Citi analysts trimmed their estimates for the group following the update. Ami Galla said the adjustment reflected “a slow construction ramp-up and, more materially, the one-off costs from the scale-back of operations in London”. The group dropped 31.6p to 430.8p, leaving it is the second-worst performer on the FTSE 250.
It was beaten only by Petropavlovsk, which tanked 19pc, dropping 5.9p to 25.1p. The gold mining company, which is focused on assets in Russia’s far east, was thrown into fresh leadership turmoil after saying the voting process at its annual general meeting was “neither transparent nor fair to shareholders”.
On the FTSE 100, which closed out its best quarter since 2010 with a poor day’s trading, Smiths Group was the biggest riser. It climbed 114p to £14.12 after unveiling restructuring plans that it said would include “some job losses”. It reported a “resilient overall performance” over the past four months, which is said reflected momentum and strong order book coming into the crisis. Jefferies’ Sandy
Morris called the update “very resilient”, but cautioned the group faces “some nearer-term additional challenges”.
Several heavyweight fallers kept the index underwater for nearly the entire session. Royal Dutch Shell dropped 46.8p to £12.24 after warning it may take a hit of up to $22bn due to the oil price crash. Its fall weighed on peer BP, which dropped 7.7p to 307.2p. It had risen on Monday after announcing plans to sell its petrochemical business to Sir Jim Ratcliffe’s Ineos for $5bn.
HSBC was another anchor on blue chips, dropping 6.2p to 378.6p after China adopted a security law as part of a crackdown in Hong Kong.
Outside equities, yields on two-year gilts hit a new record low of -0.114pc during the day, while gold futures broke through $1,800 an ounce for the first time in eight years.