Redrow PLC (LSE:RDW) is, like pretty much all of its rival housebuilders, likely to report continued softness in reservations since its final results in September, as higher interest rates weigh on the housing market.
The FTE 250-listed group last reported a private sales rate of 0.34 in the ten weeks starting from 1 July, down a whopping 44% on the same period a year earlier.
Chief executive Matthew Pratt warned that the ongoing cost of living crisis and mortgage affordability “continue to have a negative impact” on the housing market, as the Flintshire-based builder cut its dividend and sales outlook.
Pratt indicated revenue is expected to range between £1.65 billion and £1.7 billion for the year to June 2024, down from the £2.13 billion generated last time, based on a predicted similar sales rate of 0.46 per outlet per week.
On average, City analysts are expecting full-year profit before exceptionals and tax of around £186 million.
Analysts at UBS said they expects completed house sales volumes to decline 19% to 4,427 based on the guided sales rate and assuming the level of sales outlets to remain flat, with average selling prices down 1% and underlying profit (EBIT) margins of 11.2% down from 18.8%.
Those at Peel Hunt noted that Redrow’s product mix is higher value and it has more cash buyers than many peers, but "will still likely be seeing materially softer volumes".
The broker's analysts expect this current financial year will be "the weakest in this cycle, before seeing some modest improvement next year as transactions slowly improve."
They see the key focus within the announcement being sales rate and what is happening to selling prices and costs.