Image source: © 2025 Krish Capital Pty. Ltd.

Highlights:

  • BDEV completed 16,565 homes in FY25, slightly below guided range.
  • BDEV secured GBP 772 million net cash and confirmed GBP 69 million in cost synergies.
  • BDEV forecasts FY26 completions between 17,200–17,800 homes, including JV projects.

Barratt Redrow plc (LSE:BDEV), the UK-based housebuilding group formed from the recent merger of Barratt Developments and Redrow, has released its trading update for the 52 weeks ended 29 June 2025 (FY25), ahead of full-year results due on 17 September. The group completed 16,565 homes during FY25, including 538 through joint ventures, down from a combined 17,972 in FY24. This decline was attributed in part to lower completions in London, affected by reduced demand from international and institutional buyers.

The net private reservation rate rose 16.4% to 0.64 homes per sales outlet per week compared to 0.55 in FY24, bolstered by sales to private rental sector (PRS) partners. The total forward order book stood at GBP 2.92 billion as of 29 June 2025, up from GBP 2.64 billion a year earlier, representing 9,835 homes. The average selling price (ASP) for the year increased to approximately GBP 344,000, with private ASP reaching GBP 380,000. Affordable housing ASP came in at GBP 179,000.

Barratt Redrow operated from an average of 405 active sales outlets during the year and expects a broadly flat outlet count for FY26, due to delays in planning approvals despite government reform efforts. Adjusted profit before tax (excluding purchase price allocation adjustments) is anticipated to align with market expectations. Net cash at year-end was approximately GBP 772 million, down from GBP 868.5 million in FY24. The company maintained access to an undrawn GBP 700 million credit facility, extended to 2029.

Barratt Redrow confirmed £69 million in cost synergies following the Redrow acquisition, with GBP 15 million contributing to FY25 and a further GBP 45 million expected in FY26. The group targets at least GBP 100 million in synergies overall. Reorganisation costs are projected at GBP 90 million.

During the year, GBP 860 million was spent on land acquisitions, leading to approval of 108 sites and creation of 22,530 plots. Estimated adjusted items in FY25 totalled GBP 229 million. These include GBP 66 million in integration costs, GBP 29 million for proposed Competition and Markets Authority (CMA) commitments, and GBP 98 million in legacy property remediation charges. An additional GBP 150 million was attributed to revised liabilities in Redrow's portfolio, mainly concerning fire safety and concrete structural issues. The company submitted 16 planning applications for new outlets from the combined land bank, with five already approved. It aims to open 45 new outlets by FY28.

Barratt Redrow’s strategy includes delivering around 22,000 homes annually over the medium term. FY26 completions are expected between 17,200 and 17,800 homes, including around 600 from JVs. Cost inflation is projected at 1–2% for FY26, benefiting from procurement synergies. In terms of shareholder returns, the board will declare an ordinary dividend with a 1.75x cover on adjusted earnings. A GBP 100 million share buyback continues, with £50 million completed in H2 FY25 and the next tranche underway.

The UK housing market remains subdued amid high mortgage rates and cautious consumer sentiment. While build quality, customer satisfaction, and sustainability performance remain a focus, the company acknowledges external challenges including planning delays and legacy building issues. Despite these, Barratt Redrow views the long-term housing supply gap and ongoing planning reforms as key enablers for scaling delivery. It continues to prioritise operational integration, cost efficiency, and land investment to navigate the near-term environment and progress toward its medium-term volume targets.

BTRW trading at 11.43% lower at GBX 368.88 per share as on 15 July 2025.