Redrow hungry for acquisitions

Redrow, the housebuilding group that came to the stock market last year, yesterday hinted it was seeking acquisitions as a result of the current shake-out in the industry.

Steve Morgan, chairman, welcomed the rationalisation among rivals, which was long overdue, he said.

Referring to the housing operations of Tarmac, recently put on the market, Mr Morgan said: "It is a very big operation to swallow, and I think it very unlikely a trade buyer will be found for the company as a whole, but some of the regional operations could be a fit."

However, Redrow was currently "walking the high street" and was not locked in serious negotiations with any party.

His comments came as Redrow reported record results in its first full year as a publicly-quoted company, with profits before tax rising 58 per cent to pounds 30.3m in the 12 months to June. Stripping out the construction division, which was closed earlier this year, profits from continuing operations advanced 43 per cent to pounds 30.1m. A final dividend of 2.1p makes 3.15p for the year, compared with a notional 2.7p last time.

The figures were boosted by a turnaround in the interest bill from pounds 1.6m payable last time to income of pounds 1m in the latest period, after Redrow paid off pounds 30m of debt with the pounds 50m flotation proceeds. But turnover grew 14 per cent as the number of homes sold advanced 11 per cent to 2,258 and the average selling price increased 9 per cent to pounds 89,900, boosted by the phasing out of first-time buyer homes at Costain Homes, acquired two years ago.

Redrow said sales since June were flat compared with last year, although with 15 per cent more sites operating they were down on a site-for-site basis.

Brokers Smith New Court expect sales to be down 7 per cent for the coming year and has cut its profit forecast from pounds 31m to pounds 26.5m.

Redrow shares were down 2p yesterday to 107p.