Barratt Redrow Q3 Earnings Call Highlights

Key Points

• Barratt Redrow reported resilient Q3 trading with reservations up 6.3% year‑on‑year and a forward order book up 11%, keeping the group on track to deliver 17,200–17,800 homes while management says incentives have not been increased and customer sentiment remains firm.
• Redrow integration is substantially complete and the group has confirmed £100m of cost synergies (an incremental £50m this year and the full amount by year‑end), while maintaining FY2026 build cost inflation guidance at around 2%.
• The company cut land approvals guidance to 7,000–9,000 plots and reduced expected land spend to £700–800m, but raised year‑end net cash guidance to £550–650m, noting geopolitical events and a potentially prolonged higher‑rate environment as key risks.

Barratt Redrow LON: BTRW reported resilient third-quarter trading, with CEO David Thomas telling investors that reservation activity has “held up well” despite a more uncertain geopolitical backdrop. On the call, Thomas said the company’s overall reservation rate was 6.3% higher than last year, including a 3% increase in the underlying private reservation rate, supported by a higher contribution from PRS and multi-unit sales.

Thomas added that sales incentives continued to support reservation activity and were “at levels in line with the Half Year.” The company’s forward order book is 11% higher, and management said it remains on track to deliver housing volumes in line with guidance of 17,200 to 17,800 homes.

Reservations, incentives and customer sentiment

Asked whether the company had increased incentives to sustain reservations, Thomas said it had not. “We’re not feeding in a higher level of incentive to maintain reservations,” he said, emphasizing that performance varies across a portfolio of more than 400 sites and that incentives are managed “site by site within the geography.”

Thomas said reservation trends have not shown a meaningful shift since the half-year results in February, noting that the company has seen “a slight strengthening” if anything. While he acknowledged customers are asking more questions about mortgages and mortgage rates, he said it had “clearly not to date impacting customer sentiment, inquiries, or reservation levels.”

COO Mike Roberts also pushed back on the idea that buyers were bargaining harder. “We’re not seeing that people are trying to drive a harder bargain in terms of the purchase process,” Roberts said, adding that Barratt Redrow has a structured sales process and “control[s] the negotiation around the incentives available.”

Thomas later reiterated that incentives are actively managed across the site base, with variation by location and sales pace. He noted that mortgage lender rules can limit how far incentives can be increased, and at times the company may need to adjust gross prices instead.

Build activity and cost inflation outlook

Roberts said sales and build positions are where the company would expect at this stage of the year. He said only a “handful of sales” are still required for the year, and “all of our year-end private units are now roofed.” Build teams are now focused on delivering reserved homes to meet customer handover requirements and quality controls.

With an advanced build position and “limited inflationary pressure on the current year build activity,” Roberts said the company is maintaining its FY 2026 build cost inflation guidance. He reminded investors that management expects total build cost inflation of around 2% for the year, comprising 1% in the first half and an estimated 3% in the second half. The company said it would provide a further update in July.

On potential cost pressures tied to recent Middle East events, Thomas said the situation has been developing for only a short period and pointed to three primary channels of potential impact:

• Transportation to site
• Diesel usage on site across the company and supply chain
• Energy costs in the supply chain, particularly for certain materials

In response to a question about whether suppliers were already raising prices, Thomas said it was “more about delivery charges at this point,” though he acknowledged suppliers are seeing cost pressure to varying degrees.

Thomas compared the current environment to the start of the war in Ukraine, arguing the starting point now appears “slightly better” because earlier spikes were larger and the homebuilding industry was busier then. He also noted more capacity across the sector today, which could influence how build costs evolve.

Redrow integration and Synergy outlet rollout

Thomas said Redrow integration is “substantially complete,” with final IT integration scheduled to complete this month. He added that “all of the GBP 100 million cost synergies have now been confirmed.” The company expects to achieve an incremental GBP 50 million benefit to the profit and loss account in the current financial year, with a further GBP 30 million from July 2026 and the full GBP 100 million expected to flow through to the income statement by the end of December.

On outlet growth, Barratt Redrow said average sales outlet numbers were 408, essentially flat on the first half as expected. Thomas said the group launched its first two Synergy sales outlets at Curborough Fields in Lichfield ahead of schedule and expects to open a further six Synergy outlets by the end of June. Looking further ahead, management said 22 Synergy outlets are scheduled to open in FY 2027 and 15 in FY 2028. Including organic growth, the company reiterated its expectation for average sales outlets of between 425 and 435 in FY 2027.

When asked whether the outlet opening program could be adjusted if sales rates slow into 2027, Thomas said there is “a high degree of confidence” the FY 2027 outlet numbers will be delivered because lead times and existing site activity leave “not a huge amount of optionality.” He said FY 2028 outlet counts are more sensitive to land approvals made between now and the autumn.

Land approvals, cash guidance raised, and market risks

Thomas said the company is updating its land guidance as it remains selective in a market where it is seeing “fewer attractive opportunities.” During the period, Barratt Redrow approved 2,465 plots for purchase, bringing year-to-date approvals to just over 4,000 plots. The company is moving toward a longer-term model of “three and a half years owned and one year of controlled land,” which Thomas said remains the goal.

As a result, the company now expects total land approvals of between 7,000 and 9,000 plots for FY 2026, down from earlier expectations. It also expects land spend of GBP 700 million to GBP 800 million, compared with previous guidance of GBP 800 million to GBP 900 million. Thomas said that if the lower approval pace continues, it would likely have a “more significant effect on cash flows for land in FY 2027.”

The group raised guidance for its year-end net cash position to between GBP 550 million and GBP 650 million, up from GBP 400 million to GBP 500 million previously. Thomas said the change reflected “the timing of legacy building mediation payments, which are now expected to fall into next year,” as well as land cash spend timing.

On the broader outlook, Thomas said the strong order book and “good spring trading” support unchanged completions guidance, but warned that Middle East events could create industry headwinds through the potential for a “more prolonged higher interest rate environment” and cost pressures.

In Q&A, Thomas also addressed government support for first-time buyers, saying he was not aware of the government “talking to the industry” about a Help to Buy-style program. He reiterated the company’s view that some support is important for affordability, particularly for first-time buyers, and said prior industry support programs were paid for by housebuilders.

Thomas also said conditions in London remain challenging, citing affordability issues and “dramatic reductions in transaction level again” in that market.

Affordable housing and capital allocation comments

Thomas said the affordable housing market appears “in a much better position” than 12 months ago, pointing to an above-inflation settlement, improving visibility around rent convergence, and funding that can now be applied for. He acknowledged comments that some funding is back-end loaded into FY 2026 and FY 2027 but said the position is “materially better.”

On capital allocation, Thomas said the board keeps policy under review and acknowledged the decline in the share price, while also emphasizing the importance of a strong balance sheet. He said the company is currently executing a GBP 100 million share buyback program and that any further guidance would likely come at the September update.

Thomas closed by saying Barratt Redrow will return with a pre-close trading update on July 15.

About Barratt Redrow LON: BTRW

Barratt Redrow plc is an exceptional FTSE 100 listed UK home builder, building the homes the country needs, and dedicated to quality, service and sustainability. Together, we offer a range of highly respected and complementary brands, Barratt, David Wilson and Redrow. We put our customers at the heart of everything we do, through our focus on: ✅ Quality - We deliver high-quality, energy-efficient homes which are built to the highest standards. Together, we have held more NHBC Pride in the Job Awards than any other housebuilder, for 20 years.

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