Redrow deal pays off—Barratt Redrow beats expectations with strong growth

Barratt Redrow PLC has reported a solid financial performance for the first half of its 2025 fiscal year, reflecting strong operational execution, a stable UK housing market, and ongoing synergies from the acquisition of Redrow. The homebuilder has seen home completions increase, improved reservation rates, and sustained revenue growth despite broader economic challenges. With the Redrow integration progressing smoothly, the company has reaffirmed its strategic position in the industry, maintaining its reputation for quality, service, and sustainability.

How has Barratt Redrow performed in the first half of 2025?

Barratt Redrow recorded 6,846 home completions in the six months ending December 29, 2024, a 10.9% increase compared to the previous period. Revenue surged to £2.28 billion, representing a 23.2% rise, reflecting strong demand and effective pricing strategies. The company’s net private weekly reservation rate climbed by 33% to 0.60, up from 0.45 in the same period last year.

Adjusted profit before tax rose to £167.1 million, up from £157.1 million, as cost efficiencies and operational improvements drove better margins. The forward sales pipeline also remains robust, with 10,903 homes in the order book as of February 2025, valued at £3.35 billion—up from £3.13 billion a year earlier. Despite fluctuating mortgage rates and affordability concerns for first-time buyers, demand has remained resilient, particularly in the private housing sector.

What impact has the Redrow integration had on financial performance?

The Redrow integration progress has been a key driver of cost synergies, with Barratt Redrow now expecting at least £100 million in savings, surpassing its initial £90 million target. The integration has included the consolidation of business functions, with nine divisional offices either closed or planned for closure, leading to improved efficiency across operations. The transition of key areas such as Safety, Health and Environment, and IT under single leadership has helped streamline workflows and reduce overheads.

Despite these efficiencies, adjusted gross margin decreased to 14.9% from 16.0%, primarily due to purchase price allocation adjustments related to Redrow’s land and work in progress. However, before these adjustments, adjusted gross profit stood at £386.6 million, highlighting the underlying strength of the business.

CEO David Thomas emphasized that the company remains well-positioned to capitalize on demand while ensuring continued operational efficiency. He noted that Barratt Redrow earnings reflect a company that is successfully navigating a changing market, balancing growth with cost control.

How is Barratt Redrow addressing sustainability and housing quality?

As the UK’s leading sustainable homebuilder, Barratt Redrow continues to prioritize energy efficiency, sustainable construction, and high-quality housing. The company maintained its ‘5-Star’ rating in the Home Builders Federation (HBF) customer satisfaction survey, an achievement sustained for 15 consecutive years under the Barratt & David Wilson brand and six years under Redrow. The NextGeneration sustainability benchmark once again named Barratt the leading national sustainable homebuilder, while Redrow was recognized as the highest-ranked non-member in 2024.

The company has also been expanding the use of Modern Methods of Construction (MMC), particularly timber frame construction, to improve efficiency and reduce carbon emissions. During the first half of the year, 38.9% of homes were built using MMC, an increase from 35.2% in the previous year. This shift aligns with Barratt Redrow’s commitment to achieving net-zero greenhouse gas emissions by 2040, a target validated by the Science Based Targets initiative (SBTi).

What strategic partnerships and developments are shaping Barratt Redrow’s future?

Barratt Redrow is expanding its reach through key joint ventures and strategic partnerships aimed at addressing housing demand in major urban areas. The West London Partnership, launched with Places for London, will see the development of over 4,000 homes in the next decade, transforming underutilized land into residential communities with strong transport links. The MADE Partnership, a collaboration with Homes England and Lloyds Banking Group, will focus on large-scale residential-led developments, including the Godley Green Garden Village project, which will deliver more than 2,000 homes.

The company’s land acquisition strategy remains focused on maintaining a geographically balanced portfolio. In the first half of the year, 45 new sites were approved, adding 7,727 plots. The land bank now comprises 94,222 owned and controlled plots, ensuring a strong pipeline for future development.

How are market conditions influencing Barratt Redrow’s outlook for 2025?

Despite broader economic uncertainty, Barratt Redrow earnings have remained resilient, and the company expects full-year adjusted profit before tax to be at the upper end of market expectations, with Bloomberg analysts estimating a range of £506 million to £588 million. The total home completions forecast remains between 16,800 and 17,200, including approximately 600 joint venture completions.

The company has also outlined a refined capital allocation strategy, which includes an ongoing £100 million share buyback programme. The first tranche of £50 million will be executed in the second half of FY25, reflecting confidence in future earnings growth. Additionally, the interim dividend has been raised by 25% to 5.5p per share, aligning with the company’s long-term dividend policy of maintaining a 1.75x adjusted earnings cover, increasing to 2.0x from FY26.

What challenges remain for Barratt Redrow in the UK housing market?

While home completions increase and the Redrow integration progress bolsters efficiency, Barratt Redrow remains mindful of challenges in the affordable housing sector. The company reported a 37.8% drop in affordable housing completions, reflecting weaker demand from housing associations and tighter funding constraints.

Additionally, the ongoing Competition and Markets Authority (CMA) investigation into potential breaches of competition law within the housebuilding sector remains an area of focus. The CMA has extended its inquiry through May 2025, and Barratt Redrow continues to cooperate fully.

Looking ahead, the company sees affordability and mortgage availability as key determinants of future demand. While mortgage rates have stabilized, affordability remains a concern, particularly for first-time buyers. Government policies aimed at easing mortgage lending conditions or supporting homeownership initiatives could play a crucial role in shaping market dynamics.

With home completions increasing, a strong forward sales pipeline, and Barratt Redrow earnings demonstrating resilience, the company is well-positioned for continued success in 2025. The integration of Redrow has exceeded cost-saving expectations, while strategic land investments and sustainable building practices ensure long-term growth.

Despite challenges in affordable housing and regulatory scrutiny, Barratt Redrow’s strategic positioning, financial strength, and market adaptability make it a leading player in the UK homebuilding sector. As the company moves into the second half of the year, its focus remains on delivering quality homes, enhancing operational efficiencies, and maximizing shareholder returns.