Redrow sales down as housing market falters
REDROW yesterday became the latest housebuilder to report a slump in sales as the economy hit real turbulence.
The company said private reservations since the start of July were down by nearly a fifth – at £515million.
The plunge follows weaker results from rivals since the cost-of-living crisis and soaring interest rates hit consumer confidence.
Speaking at Redrow’s AGM, chairman Richard Akers insisted the firm was in a strong position, with a record order book of £1.44billion.
But he added: “Recent instability in financial markets has had a negative impact on the housing market and the business has had to adapt to the changing economic outlook.”
While reservations have fallen, Redrow said its average selling price for the first 18 weeks of the financial year was up 6.9 per cent on the equivalent period last year, at £483,000.
Partly as a result, the company expects its revenue for this year to be around £2.1billion.
However, its operating profit margin is forecast to drop from 19.3 per cent to about 18 per cent.
Shortages of certain materials and price rises continue to be a headache for construction firms.
Redrow estimates that its overall build cost inflation will be around seven per cent for the current financial year.
Competitor Taylor Wimpey said this week it believes the group can still hit its full-year sales and profits targets even though sales had fallen.
It came as a survey from the Royal Institution of Chartered Surveyors also revealed the growth in property prices had lately “ground to halt”.
Shares in FTSE 250 Redrow were largely unmoved yesterday but they are down a third since the start of the year.
The company was founded in North Wales by Steve Morgan, 21, with £5,000 from his dad in 1974. He started out as a drainage contractor.