Barratt Redrow Shares Rise on £100m Buyback and Positive Forecast
By Aby Jose Koilparambil
(Reuters) -British homebuilder Barratt Redrow said it would buy back shares worth 100 million pounds ($124 million) per year and predicted annual earnings would land at the upper end of analysts' expectations, sending its shares surging.
Shares in the FTSE 100 company jumped 9% in early trade to their highest levels in more than three months.
The company said the integration of Redrow was progressing well, and remained on track to deliver at least 100 million pounds of cost synergies, 10 million pounds more than its original target.
"This is a strong update from Barratt Redrow with both the synergy upgrade and buyback initiation a positive surprise," JP Morgan analysts said in a note.
Barratt's upbeat outlook comes amid renewed affordability concerns in the British housing sector due to a slower-than-expected pace of interest rate cuts.
CEO David Thomas told Reuters that the company does not anticipate a significant shift in consumer demand in the near term, adding that its growth in home construction would mainly come from opening more sales outlets rather than a fundamental increase in demand.
The company said it expects to build about 22,000 homes per year, with its operating margin recovering to 15% in the medium term.
The group also declared an interim dividend of 5.5 pence per share, up from 4.4 pence a year earlier.
The group's half-year adjusted profit before tax came in at 167.1 million pounds, down 33% compared to combined profit for the two companies in the year-ago period, partly due to costs related to the acquisition.
But it said full-year earnings to end-June should come in at the upper end of expectations as it stands to benefit from solid bookings since the start of 2025.
Analysts' expectations for annual adjusted pre-tax profit range from 243 million pounds to 588.4 million pounds, according to LSEG.
Shares in Barratt's smaller rival Bellway fell 5% on Tuesday after analysts said that market estimates for its next fiscal year will be tempered.
($1 = 0.8036 pounds)
(Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Subhranshu Sahu, Edwina Gibbs and Kim Coghill)
