The housing bubble continues apace despite nasty signs beginning to emerge from the Greater London area. On the face of it Redrow is fully enjoying the fruits of the boom, producing yet another record set of results and doubling its interim dividend yet again. It has however suffered a sever fall in growth in both revenue and profit before tax.
For the half year to 31st December revenue rose by a comparatively meagre 8%, profit before tax by 14% and earnings per share by 15%. Legal completions in the half year rose by 18%.
Compare this with the interims to 31st December 2014. Legal completions then also grew by 18% but group revenue was up by 54%, profit before tax by 92% and earnings per share by 93%.
In December 2014 net debt stood at £140m., in June it had risen to £154m and in December it was up by another 20% or so to £183m., all due no doubt to increases in the company’s land bank.
Redrow has now quadrupled its interim dividend in 2 years, from 1p (its first ever interim dividend) to 4p. It promises that the 2016 full year payment should be 10p as against last years 6p. Demand for new homes is described as robust and a strong performance is expected for the current year, with the private order book up by 51%
Redrow is one of the few housebuilding companies which is too shy to publish its average price and average price increases for the period under review.
Were I a number cruncher, I may, no doubt have the answers at my finger tips but being merely a humble scribe, I just wonder why the growth rate in revenue and profit before tax has collapsed so dramatically.
The share price has fallen from 500p to 424p but that is nothing out of the ordinary for the sector and this morning it has held steady.