(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, which lost more than a fifth of their value in 2024, jumped 9% in early trade to their highest levels in more than three months.
The company said the integration of Redrow is progressing well, and the group is on track to deliver at least 100 million pounds of cost synergies, 10 million pounds more than its original target.
“Overall, we think 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.
The expiry of temporary tax incentives for buyers of less-expensive homes and for first-time buyers at the end of next month is likely to bring forward some housing demand, analysts have said. That’s despite the affordability concerns resurfacing due to a slower-than-expected pace of interest rate cuts.
“As the economic, political and lending environments have stabilised, there has been some recovery in customer demand and we have seen solid reservation activity since the start of January,” CEO David Thomas said in a statement.
The company said it expects to build about 22,000 homes per year with 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 paid by the Barratt group a year earlier.
The group’s half-year adjusted profit before tax came in at 167.1 million pounds. That’s a decline of 33% compared to combined profit for the two companies in the year-ago period, partly due to costs related to 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.
Barrat Redrow said the share buyback programme will begin shortly with 50 million pounds expected to be returned in the second half of the financial year.
($1 = 0.8036 pounds)
(Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Subhranshu Sahu and Edwina Gibbs)
