Redrow Share Price Fell 6.7% on AGM, Weak Private Reservations

The Redrow plc (LON: RDW) share price fell 6.7% after releasing its AGM statement for today’s AGM, including a trading update covering the 18 weeks to 3 November 2023. The company noted that the value of its net private reservations was £384 million, representing a 25% decline compared to last year's figure of £515 million.

Gross private reservations per outlet per week stood at 0.49, down from 0.63 in the previous year (with no bulk sales in either period). Despite the company’s customers generally displaying financial resilience, it's worth noting that 35% of the private customers are cash buyers, many of whom occupy the upper echelons of the house purchase chain.

The home-building company revealed that currently, there has been a higher incidence of chain breakdowns due to difficulties with mortgages lower down the chain. Consequently, our cancellation rate for the year to date has risen to 25% (compared to 22% in 2023), resulting in a net weekly reservation rate of 0.36. 

While there has been a moderation in build cost inflation, we still expect an overall build cost inflation rate of approximately 7% for the current financial year, primarily due to inflation inherent in the opening work in progress.

Homes turnover for the period was 30% lower than the previous year, amounting to £456 million (compared to £650 million in 2023). As of November 3, the total order book stands at £864 million, of which 66% has been exchanged. This compares to £1.36 billion at the same time last year, with 74% exchanged.

We maintain our expectation that our results will fall within the guidance range provided in September 2023, with revenue ranging between £1.65 billion and £1.7 billion and profit before tax falling within the range of £180 million to £200 million. 

The company’s balance sheet remains robust, with net cash of £125 million on November 3, 2023 (compared to £182 million on November 4, 2022). 

At today's AGM, Richard Akers, Redrow’s Chairman, will say: “Following the usual summer slowdown we reported in our 2023 results announcement, the housing market has remained subdued through the Autumn. The business has had to adapt to this more difficult trading environment in terms of build rate and operating costs. However, we continue with our strategy of delivering our high quality, award-winning Heritage homes to our target customers.”    

Redrow share price. 

The Redrow share price fell 6.71% to trade at 482.3p from Thursday’s closing price of 517.0p.