Redrow returns to profit
Published: 10 September, 2010
EWLOE: Redrow is the latest house builder to see an upturn in its fortunes, returning to the black over the last year.
Steve Morgan, chairman, said the housing market had been "pretty steady" but warned that a lack of first-time buyers would hold back the recovery.
The house builder made a £700 000 profit before tax and one-off items in the year to 30 June, compared with a £44.2m loss last year. Completions climbed 22% to 2587 and the gross margin jumped to 10.5% from 1.8%. But unlike some rivals that have restored dividend payments to shareholders, Redrow did not declare a dividend.
Mr Morgan said market improvement cannot be achieved without the first-time buyer stimulating the chain. He urged the government to intervene and proposed an insurance indemnity scheme to enable lenders to provide up to 90%-95% mortgages once again to first-time buyers, or at the very least provide a first-time-buyer tax break.
Mr Morgan said the market behaved "very strangely" last year when it began to recover from its slump. Normally there is a dip over the summer when people go on holiday and an unpturn in the autumn. "Last year there was no real difference between spring, summer and autumn. This year we had more of a drop-off in the summer. We're hoping that we're going to see an uplift in the market in the autumn."
Pointing to the government's austerity measures, he said that, into 2011, "we're not expecting the market to boom in any way but we're not expecting it to drop off either".