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Britain's leading homebuilder Barratt Redrow has reported lower first-half profits and reduced its interim dividend due to rising construction costs squeezing margins in a subdued housing market. Adjusted pre-tax profit fell 13.6% to GBP 199.9 million (around USD 274 million), while the dividend was cut from 5.5 pence to 5 pence per share. The company has scaled back land approvals to 10,000-12,000 plots and plans to expand property marketing outlets in fiscal 2027. It does not expect a major boost from government planning reforms until mid-2026 but aims to maintain its full-year profit and home completion targets.
Barratt Redrow, the UK's largest homebuilder, has faced a challenging market as rising building costs have continued to put pressure on profit margins. For the first half of its financial year, adjusted pre-tax profit fell by 13.6% to GBP 199.9 million (around USD 274 million). In response, the company reduced its interim dividend from 5.5 pence per share to 5 pence, which led to its shares dropping over 8% after the announcement. Advertisement
CEO David Thomas explained that the company can absorb modest cost increases without needing significant house price growth, noting that a 2% increase in building costs could be managed with less than 1% house price growth. He highlighted that steadier mortgage rates and reservation levels have helped offset some negative impacts of rising costs.
The company also clarified that the UK government's planning reforms, which became law late last year to ease development approvals, are not expected to provide meaningful benefits until mid-2026. Barratt Redrow has consequently reduced its land approval plans for the current fiscal year to 10,000-12,000 plots, down from an earlier level of roughly 17,000.
Although the rate of sales is not expected to accelerate significantly, the company anticipates an increase in home completion volumes. Barratt Redrow also plans to raise the number of property marketing outlets to between 425 and 435 in fiscal 2027 from 409 at the end of last year. For the full year ending in June, the company reaffirmed its adjusted pre-tax profit target within the consensus range of GBP 558-617 million and maintained its home completion goals.
Source Reuters
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