Barratt Redrow: integration continuing (pic: DB Media Services)
Barratt Redrow has responded to shareholder pressure by replacing the bulk of its dividend payout with a £400 million buyback in a bid to boost its flagging share price.
The housebuilder said its depressed stock market value means the buyback programme makes better use of its capital.
Of the total return, £14m will be paid as an ordinary dividend of 1p per share with £386m to be delivered through share buybacks.
In a trading update it reported a solid performance for the 52 weeks ended 28 June, completing 17,667 homes and achieving adjusted profit before tax in line with market expectations, despite challenging market conditions.
Completion numbers rose 5% year-on-year, but it said higher mortgage rates, affordability pressures and weak consumer confidence continue to hold back demand.
It said the integration of Redrow is progressing well, delivering synergies, and the company maintains a strong balance sheet with year-end net cash of approximately £772 million. For FY27, Barratt Redrow anticipates total home completions between 17,700 and 18,200.
David Thomas, chief executive, commented: “The sector continues to navigate macroeconomic and geopolitical uncertainty, alongside industry headwinds and subdued customer demand, which have weighed on market sentiment.
“However, this means that given our performance and resulting balance sheet strength, deploying capital through an expanded share buyback programme is currently the most effective way to create long-term shareholder value, and we intend to return £400m to shareholders in FY27, primarily through share buybacks.
“Despite the backdrop, we are very well positioned. Redrow has been successfully integrated and is delivering the synergies planned and we continue to target further cost savings.
“Our flexible business model, strong balance sheet and further opportunities to optimise capital employed, such as the roll out of further synergy sales outlets, position us well to drive attractive returns for shareholders over the long term.”
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