Barratt Redrow (LON:BTRW) reported what management described as a “resilient” first-half performance for FY26, pointing to higher completions and progress on integrating Redrow despite a subdued UK housing market and low consumer confidence. Executives said uncertainty ahead of the November budget weighed on demand in late 2025, while improved mortgage availability and two interest rate cuts provided some support.
Operational performance: higher completions, shifting sales mix
Chief Operating Officer Mike Roberts said the group delivered 7,444 homes in the first half, up 4.7% versus the prior year’s aggregated performance. He emphasized that the increase was partly timing-related and that full-year guidance was unchanged.
- PRS reservations fell to 4% of overall reservation volumes from 9% a year earlier, as the market became harder ahead of the budget and the group said it maintained discipline on pricing and discounts.
- Part exchange rose to 23% of private reservations from 14%, which management linked to customers seeking a “stress-free” move amid concerns about conveyancing chains and the rollout of Barratt’s part exchange capabilities into the Redrow brand.
Roberts said part exchange stock levels were “carefully managed,” with 180 units unsold at the half-year point. He also reported that underlying private reservation rates remained solid at 0.55 reservations per week, ahead of last year, even as PRS and other multi-unit sales “effectively paused” in the run-up to the budget.
The group operated from an average of 405 sales outlets, lower than last year but in line with plans. The private forward order book was 10% lower at the half-year stage, which management attributed to a high opening position coming into the year, a reduced reservation rate, fewer outlets, and increased first-half completions.
Financial results: lower profit, margin pressure, synergies offset admin costs
Investor Relations Director John Messenger said adjusted profit before tax before purchase price allocation (PPA) impacts fell 13.6% year over year to £200 million, citing higher net finance costs and lower joint venture (JV) profits. Revenue rose 10.5% to £2.6 billion on higher completions and a higher average selling price, but adjusted gross margin declined 200 basis points to 15%.
Messenger identified three main drivers of the gross margin decline:
- Underlying pricing was flat despite volume and average selling price increases, which he said reflected mix and geographic effects rather than broad price gains.
- Greater use of non-cash incentives, particularly extras and upgrades, which were used to convert reservations amid a challenging backdrop and flowed through cost of goods sold.
- Build cost inflation of about 1% in the period, including procurement cost synergies.
Adjusted operating profit before PPA was flat at £210.2 million, with operating margin down 90 basis points to 8%. Adjusted finance charges were £12.4 million compared with finance income of £12.2 million in the prior-year period, reflecting lower average cash balances, use of the revolving credit facility, and changes in imputed interest on land creditors. JV income fell to £2.1 million due to lower JV completions.
Adjusted earnings per share were £0.10. The company proposed an interim dividend of £0.05 per share, with a stated 2x dividend cover ratio for the full year.
Redrow integration and synergy targets
Chief Executive David Thomas said Redrow integration was “near completion,” with completion expected by April, and that the group was now operating “from three distinct high-quality brands.” He reiterated that the £100 million annual cost synergy target remained unchanged, adding that “virtually all” of the target had been confirmed at the end of December.
Thomas said the group delivered £20 million of cost synergies through the profit and loss account in FY25 and expects a further £50 million in FY26, having already delivered over £30 million in the first half. Messenger quantified cost synergies as a £23.2 million reduction in administrative expenses during the half, helping bring adjusted admin expenses down 5.4% to £184.8 million versus the aggregated prior-year baseline.
On revenue synergies, Thomas said the group is targeting 45 incremental sales outlets. Management reported 31 planning applications submitted to date, with 16 approvals received. The company expects the first synergy sites to be ready to open for sales at the start of FY27.
Land bank, outlet outlook, and margin embedded in land
The company said its owned and controlled land bank duration was 5.6 years at December, reflecting a steadier pace of acquisition, higher completions, and reclassification of some Redrow plots into the strategic land bank. Management said this supported selectivity on land intake and capital efficiency.
Messenger reported an embedded gross margin in the owned land bank of 18.9% at the half-year end, 30 basis points lower. He broke the movement into:
- +40 basis points from the mix of plots completed in the half (completed at 14.5% after including PPA impacts).
- -90 basis points from flat pricing, build cost inflation, and incremental incentives.
- +20 basis points from land acquired in the period at a 23% gross margin.
Looking ahead, the company reiterated expectations for average outlets to be flat in FY26, followed by an increase in FY27 aided by organic growth and “around 15” synergy outlets coming on stream, targeting 425 to 435 average outlets in FY27. Executives said much of the outlet growth plan would be delivered using land already under control rather than requiring significant future land purchases.
Cash flow, capital returns, and building safety
Messenger said the group recorded a net cash outflow of just under £600 million in the half, primarily driven by a seasonal increase in construction work in progress and part exchange investment totaling just over £313 million. Net land investment was £68.7 million. The company paid £172 million in dividends and completed £50 million of share buybacks, with a further £50 million underway as part of a £100 million program.
Management said it expects an inflow of around £300 million in the second half, with year-end net cash guided to £400 million to £500 million.
On building safety, Messenger said there were no changes required to the group’s provision position. The company spent £77.8 million on works in the half, and after an imputed interest unwind of £19.6 million, legacy property provisions remained at just over £1 billion.
For FY26, the company reiterated guidance of 17,200 to 17,800 total completions, broadly flat underlying pricing, and build cost inflation of around 2% (including procurement synergies). It also guided to an adjusted finance charge of approximately £30 million, with provision-related adjusted item imputed finance of £32 million, and building safety cash spend of about £250 million.
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.
