Barratt Redrow H2 Earnings Call Highlights

Key Points

• FY 2026 volumes increased: Barratt Redrow completed 17,667 homes, up 5% year over year, with revenue exceeding £6 billion. However, underlying selling prices fell just under 1%, while incentives and build-cost inflation reduced margins and adjusted profit before tax to £572.8 million.
• Redrow integration delivered progress: The company completed the integration and validated its £100 million cost-synergy target, generating a £73 million profit-and-loss benefit in FY 2026. Its multi-brand strategy is gaining traction, with triple-branded sites selling more than three times the pre-launch weekly rate in early results.
• FY 2027 priorities include cash generation and buybacks: Barratt Redrow maintained its completion guidance at 17,500–17,900 homes and plans £400 million in capital returns, including £386 million of share repurchases. It expects £400 million–£500 million of net cash at year-end, while forecasting £300 million of building-safety spending.

Barratt Redrow LON: BTRW reported a solid FY 2026 performance amid what it described as challenging housing-market conditions, with higher home completions and completed integration savings from its Redrow acquisition helping offset softer pricing, incentives and rising build costs.

The housebuilder completed 17,667 homes during the year, up 5% from FY 2025 and toward the upper end of its prior guidance range. Revenue rose above £6 billion, supported by increased volumes and a 2.2% rise in wholly owned average selling price to £351,700.

However, the company said the average selling price increase primarily reflected product and geographic mix, including larger average unit sizes and a higher contribution from regions with higher selling prices. Its matching-plots analysis indicated underlying selling-price deflation of just under 1% for the year, with London and the Southern division seeing notable pressure.

Profitability affected by incentives and costs

Adjusted profit before tax before purchase-price-accounting impacts fell to £572.8 million, reflecting higher net interest costs and lower joint-venture profits. Adjusted operating profit edged higher to £598.1 million, while operating margin declined to 9.9% from 10.5% on an aggregated comparable basis in FY 2025.

Investor Relations Director John Messenger said adjusted gross margin declined to 15.3%. The company cited softer underlying pricing, targeted sales incentives and 2% build-cost inflation net of procurement synergies as key factors affecting margins.

Barratt Redrow said financial incentives reduced revenue while non-financial incentives, such as customer upgrades, raised cost of sales. It has used incentives tactically to preserve sales momentum as affordability remained difficult for buyers, particularly first-time buyers.

The group expects build-cost inflation of 3% to 4% in FY 2027, weighted toward materials. Chief Operating Officer Mike Roberts said pressure remained most evident in energy- and oil-dependent materials, timber, blocks and plasterboard, although the company expects lower labor inflation because of spare industry capacity and subcontractors seeking to secure future work.

Redrow integration and multi-brand strategy

The company confirmed that its Redrow integration is complete and that it has validated its £100 million cost-synergy target. The acquisition generated a £73 million profit-and-loss benefit in FY 2026, including £53 million of administrative expense savings. Barratt Redrow expects most of the remaining synergies to be delivered in FY 2027, taking the annual contribution to about £95 million.

Management also highlighted early progress from dual- and triple-branded developments. Multi-branded outlets represented 44% of the total at the end of the year, and the company had three triple-branded sites operating.

Roberts said each triple-branded development was selling more than 1.5 homes per week in the first 10 weeks of FY 2027, compared with around 0.5 homes per week before triple branding. He cautioned that the sample remained small, but said the performance reinforced the company’s view that multiple brands can improve the use of larger land sites.

Barratt Redrow launched 12 of its targeted 45 incremental synergy outlets in FY 2026. It expects 18 further outlets to open in FY 2027 and the remaining 15 in FY 2028.

FY 2027 outlook and capital returns

The group expects to operate from an average of about 405 sales outlets in FY 2027, reduced from its previous expectation of approximately 415 because of slower planning approvals. It maintained guidance for total completions of 17,500 to 17,900 homes.

The private forward order book stood at 4,570 homes at the end of June, below the prior year. Still, the company said its forward sales position was up 6% in early FY 2027, and management said the private reservation rate had remained resilient during the first 10 weeks of the year.

Messenger said reaching the midpoint of FY 2027 volume guidance would require an all-in sales rate, including multi-unit sales, of about 0.63 to 0.64 reservations per outlet per week over the remainder of the year. The company reported an underlying private reservation rate of 0.56 in FY 2026 and 0.53 during the first 10 weeks of FY 2027.

The company ended FY 2026 with a £61.4 million net surplus position, compared with net indebtedness of £37 million a year earlier. It expects to end FY 2027 with £400 million to £500 million of net cash, subject to land-market activity.

Barratt Redrow also increased and extended its revolving credit facility to £900 million through July 2031, with potential lender-approved extensions through July 2033.

For FY 2027, the board plans total capital returns of £400 million, including £386 million through share buybacks. Except for a nominal one-penny dividend, the company said its ordinary distribution equivalent to 50% of adjusted net earnings will now be delivered through buybacks, supplemented by at least £100 million of additional repurchases.

Land discipline and building-safety spending

The company reduced land investment during the year while maintaining a landbank equivalent to 5.2 years of supply. It approved purchases of just over 3,000 plots, net of nearly 5,000 canceled plots, and expects FY 2027 approvals of 6,000 to 8,000 plots only where opportunities are sufficiently attractive.

Its embedded landbank gross margin fell to 17.3% at year-end from 18.9% in December, as softer pricing, build-cost inflation and incremental incentives outweighed benefits from plot mix and newly acquired land.

Barratt Redrow ended the year with a £1.05 billion building-safety provision. It expects to spend approximately £300 million in FY 2027 and £450 million in FY 2028 on direct remediation work and payments to the Building Safety Fund.

The company also said incoming Chief Executive Dean Banks and Chief Financial Officer Rebecca Napier had joined the business, while its outgoing chief executive will retire the following week.

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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