Barratt Redrow Q4 Earnings Call Highlights

Barratt Redrow (LON:BTRW) said it delivered a “solid performance” in a challenging housing market, with completions rising and profit in line with expectations, while announcing a planned £400 million capital return for FY 2027 that will be delivered predominantly through share buybacks.

Chief Executive Officer David Thomas said the company completed 17,667 homes in FY 2026, up 5% from the prior year on an aggregated basis, and ended the year with net cash of £772 million. Thomas said the cash position was around £170 million better than the company’s April guidance, helped by lower land investment and cost control.

“Clearly, the operating environment is challenging, but we’ve responded proactively to these challenges,” Thomas said. “We’ve used incentives carefully to maintain sales momentum.”

Thomas said adjusted profit before tax was in line with market expectations. He also noted that the company achieved 122 NHBC Pride in the Job awards, which he said was more than any other housebuilder for the 22nd consecutive year and Barratt Redrow’s best result to date.

Capital Return to Lean Heavily on Buybacks

Thomas said Barratt Redrow has returned almost £3.5 billion to shareholders over the past 10 years and described the newly announced £400 million return as consistent with the company’s capital allocation policy.

He said the policy is designed to maintain a strong balance sheet while preserving flexibility to invest in growth and meet “significant cash commitments” over the next few years. Because the company’s shares are trading at a “significant discount to tangible net asset value,” Thomas said the FY 2027 capital return will be delivered mostly through share buybacks, alongside a nominal dividend.

Looking ahead, he said Barratt Redrow remains committed to returning 50% of earnings to shareholders, complemented by a minimum £100 million annual share buyback.

Reservations Hold Steady as Incentives Remain Elevated

Mike Roberts said the company’s overall private reservation rate was 0.64, compared with 0.63 on an aggregated basis last year. That figure included a 0.08 contribution from private rented sector and multi-unit sales, in line with last year.

Roberts said PRS reservations shifted toward the end of the year following budget uncertainty. He also said sales incentives remained at elevated levels seen in the second quarter after the outbreak of the conflict in the Middle East.

“We would expect incentives to stay at this level until consumer sentiment and affordability improves,” Roberts said.

The average selling price for the year was £352,000, up 2.3%, driven by increased home size and a higher contribution from regions with higher average selling prices. However, Roberts said underlying sales pricing was around 1% lower across the year, and the year-end order book carried an underlying average selling price decline of 1.4%.

Roberts said the order book remained “solid,” with forward sales of £2.8 billion, only slightly lower than last year.

Outlet Guidance Cut Amid Planning Delays

Barratt Redrow’s average sales outlets were 405 during the year, flat versus the first half and in line with earlier guidance. Roberts said the company launched 136 new sales outlets, including its first 12 “Synergy” sales outlets using its multi-brand approach.

Roberts said the Synergy sites had performed “really encouragingly.” In the question-and-answer session, he said two of three Synergy outlets in Yorkshire had doubled the sales rate previously achieved by a single brand, while another retained a 0.6 rate for both brands after the second brand was added.

The company plans to open 18 additional Synergy sites in FY 2027 and target another 15 in FY 2028. However, Roberts said Barratt Redrow now expects average sales outlets of around 415 in FY 2027, down from prior guidance of 425 to 435, citing the “frustratingly slow pace of planning approvals” and progress on outlet closures.

On land, Thomas said the company approved just over 3,000 plots for purchase in FY 2026, well below the 7,000 to 9,000 plots guided to in April. He said this reflected a deliberate decision to be more selective and to cancel some prior approvals because of the uncertain environment. Land cash spend was £625 million, below the previously guided £700 million to £800 million range.

Build Costs and Legacy Charges Weigh on Outlook

Roberts said build cost inflation for FY 2026 played out in line with prior guidance and that the company expects further pressure in FY 2027, especially in materials. Barratt Redrow currently assumes total build cost inflation of 3% to 4% for FY 2027, with materials at 4% to 5% and labor at 2% to 3%.

Roberts said the scale of the combined Barratt Redrow business is helping mitigate some of the impact through negotiations with supply chain partners. He said the company has agreed surcharges in some cases tied to oil and energy costs, with mechanisms for those charges to reduce if input costs fall.

Thomas also said adjusted items are expected to total about £160 million. The largest component is around £95 million of legacy property provision charges, mainly reflecting additional remediation costs on two developments already under review and the impact of build cost inflation.

Thomas said the additional remediation costs were disappointing but emphasized that they primarily related to buildings already known to the company, rather than an expansion in the number of buildings in the portfolio.

FY 2027 Completion Guidance Set at 17,700 to 18,200 Homes

Barratt Redrow said the operational elements of the Redrow integration are complete. Thomas said all £100 million of targeted cost synergies have been confirmed, with £73 million benefiting the profit and loss account in FY 2026 and a further £27 million expected before the end of December 2027.

In the Q, Thomas said affordability remained most challenged in London and the Southeast compared with Scotland and the North of England. He also said first-time buyers and downsizers are more likely to pause during periods of uncertainty, while second steppers often have stronger reasons to move.

Thomas reiterated the company’s view that demand-side support for first-time buyers is important for the housing market, though he said Barratt Redrow is not planning its business on the assumption that such support will be introduced.

“We have navigated difficult markets before,” Thomas said. “We see that we are well-positioned.”

The company expects to deliver total home completions of between 17,700 and 18,200 in FY 2027.

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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