Redrow, the British housebuilder, has reported that profits tumbled by almost two-thirds over the year to June 28 due to the effects of the coronavirus pandemic. COVID-19 pandemic affected construction and sales which lead Redrow to lower profits.
It said that pre-tax profits slid by 65.5% to £140 million for the year, as revenues dived by 37% to £1.34 billion.
Legal completions on properties also dropped by 37% to 4,032 deals for the year.
However, the company said it now has a “record order book” and has completed “substantially more homes in the first few weeks of the new financial year” than during the same period last year.
The company says it completed very few sales in the final quarter of the financial year.
This is hardly surprising, of course, given that very little was happening in the housing market for about a month and a half.
Redrow said it now has “high levels of work in progress” amid strong demand following the pandemic.
The company that its order book of £1.42 billion is up 39% on the same period last year, while reservations for the first 11 weeks of the new financial year increased by 12%.
It said it expects this to support Redrow’s plans to drive regional growth, after announcing plans to scale back its London operations in June.
Redrow said it shut down its construction sites in March, before reopening its first sites again in May.
It said sales centres also reopened on an appointment-only basis in May before full reopening a month later.
Redrow furloughed around 80% of staff as part of measures to support its operations during the peak of the pandemic, although all staff returned to work by June.
It said that although demand has jumped since reopening sales sites, there are still a number of factors which could weigh down on the market, including the ongoing impact of the pandemic and “the possibility of a no-deal exit from the EU”.
John Tutte, the company’s Executive Chairman, said about this:
“The COVID-19 pandemic had a profound impact upon the group’s performance in the 2020 financial year but we entered the new financial year in a position of strength.”
“This was due in part, to increased investment earlier in the year in anticipation of strong demand for the Help to Buy scheme ahead of changes to the scheme next year.
“The group is well-placed to deliver a robust performance.”
Despite the company’s revenue dropped, Tutte says, the company began the new financial year with a larger order book.
Tutte also confirmed that a recovery was underway in the housing market. However, he cautioned that this needs to be maintained, saying:
“What we don’t want is to be a short-term recovery. It needs to be a sustainable recovery.”
He believes the Government should consider reforming stamp duty in the long term to achieve this.
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