Housebuilder Barratt Redrow (BTRW) confirmed its targets for FY26 housing completions and pre-tax profit, lifting its shares 1.6% to 262p. The group also raised its target for year-end net cash to £550 million to £650 million from £400 million to £500 million previously.
‘Good demand’
For Q3, covering the 13 weeks to 29 March, the firm said it saw ‘a resilient reservation rate underpinned by good customer demand’. It also said it expected the Middle East siuation to have ‘limited impact’ on its FY26 performance.
As a result, it should deliver between 17,200 and 17,800 new homes by the end of June, in line with guidance. It also sees pre-tax profit in line with the consensus of £568 million excluding purchase price allocation adjustments.
Net private reservations for Q3 were up slightly to 0.64 per outlet per week against 0.62 a year ago. The firm is now 94% forward sold for FY26, with a value of £3.54 billion against £3.14 billion a year ago.
The company operated from slightly fewer sales outlets than last year, which may have lifted the weekly figure. It also said sales incentives were in line with the H1 and were supporting reservation rates.
Interestingly, the firm said it was being more selective in developing land into plots given geopolitical tensions and build costs. Therefore approvals and land spend will be below previously-issued targets, allowing the firm to conserve cash.
For once we’re more positive than the market on today’s update from Barratt Redrow, which is an odd feeling. Considering the shares were down 42% as of last night, we expected to see a proper relief rally.
Essentially there were few negatives and the company has confirmed its key FY targets, so it hasn’t disappointed. Moreover, the fact year-end cash is set to be £150 million higher than originally expected will encourage investors. The current £100 million buyback expires in June, so the hope will be the firm extends it again from July.
We also find it interesting the firm is scaling back land purchases and developing new plots. It says there are fewer attractive opportunities to buy sites, but also it is being selective in where it builds.
We’ve held off from recommending the housebuilders because we couldn’t tell if the low for the cycle was in. The fact developers themselves are reining in supply is a good sign, although we still have build costs and interest rates to worry about. We’ll watch the next few updates to see if there’s a general lifting of the mood, in which case the trade might be on.
Read the press release here: https://www.barrattredrow.co.uk/investors
