HY26 Results: Completions Up, Margins Under Pressure, Integration On Track
Barratt Redrow has posted a steady first half in a tricky market. Total home completions rose 4.7% to 7,444, with revenue up 10.5% to £2,632.1m. Profit quality is the swing factor: adjusted operating profit before purchase price allocation (PPA) was broadly flat at £210.2m, but adjusted profit before tax before PPA dipped 13.6% to £199.9m as incentives and modest build cost inflation squeezed margins.
Against that, the Redrow integration is doing real work. Cost synergies are flowing, admin costs are down, and the enlarged group looks set to hit its £100m synergy target by HY28 – with around £50m expected to benefit FY26. Guidance on volumes is unchanged.
Key Numbers Retail Investors Care About
| Metric (HY26 unless stated) | Result | YoY/Reference |
|---|---|---|
| Total completions | 7,444 | +4.7% vs aggregated HY25 (7,107) |
| Revenue | £2,632.1m | +10.5% vs aggregated HY25 (£2,381.9m) |
| Adjusted operating profit (pre-PPA) | £210.2m | -0.3% vs aggregated HY25 (£210.8m) |
| Adjusted PBT (pre-PPA) | £199.9m | -13.6% vs aggregated HY25 (£231.4m) |
| Statutory PBT | £156.2m | £113.4mR / £85.0mA in HY25 |
| Adjusted operating margin (pre-PPA) | 8.0% | 8.9%A in HY25 |
| Net cash (period end) | £173.9m | £458.9m in HY25 |
| Interim dividend | 5.0p | 5.5p in HY25 |
| Forward sales (1 Feb 2026) | 11,168 homes, £3,407.8m | 10,903 homes, £3,350.3m (2 Feb 2025) |
Revenue, Profit and Margins: What Moved and Why
Margins did the heavy lifting on the downside. Adjusted gross margin before PPA fell to 15.0% (from 17.0%), reflecting higher incentives and c.1% build cost inflation running through the P&L. The adjusted operating margin before PPA slipped 90 bps to 8.0% despite higher completions – a decent result once you factor in the £23.2m of incremental synergies and lower admin costs.
Adjusted PBT before PPA dropped to £199.9m (-13.6%) as JV profits were lower (£2.1m) and non-cash finance charges rose. Statutory PBT improved to £156.2m thanks to a much smaller drag from integration and PPA adjustments compared with the comparable period.
Reservations, Forward Sales and Mix: Private Softer, Affordable Stronger
The private sales engine is steady, not spectacular. The underlying net private reservation rate was 0.55 per outlet per week (0.54A), while the overall private rate was 0.57 (0.59A) due to fewer bulk multi‑unit deals. In early H2, the weekly private rate was 0.59 (2025: 0.60) with no PRS or other multi-unit sales in the mix.
Forward sales at 1 February 2026 grew modestly in total – 11,168 homes (+2.4%) worth £3,407.8m (+1.7%). The mix matters: private forward sales were down 11.2% by units, while affordable surged 14.4% by units and 33.5% by value, helped by a better funding backdrop (including AHP measures). The group is 81% forward sold on private wholly owned FY26 completions (FY25: 86%).
Average Selling Prices and Mix: Pricing Flat, Mix Up
There is no sign of underlying price inflation across the board, but mix has helped. The underlying private ASP rose 5.4% to £401.0k, largely on geography and product mix – including more Redrow brand completions. Affordable ASP increased 20.1% to £213.2k due to a higher London contribution and some unit size effects.
Cash, Land and Balance Sheet: Working Capital Heavy, Guidance Intact
Net cash at period end was £173.9m, down year-on-year as the group leaned into construction work in progress, paid the £171.8m final FY25 dividend and executed £50.4m of buybacks. Land creditors rose to £767.2m (15.0% of owned land bank), leaving total net indebtedness (net cash less land creditors) of £593.3m.
Land approvals were deliberately light at 1,545 plots versus 7,727 a year ago as management prioritised discipline over replacing every plot built. FY26 approvals are now guided to 10,000-12,000 plots. The owned land bank stands at 5.0 years, with a medium-term target of c.3.5 years owned plus c.1.0 year controlled.
Redrow Integration and Synergies: Cost Savings Cushion Margins
Integration is close to complete and delivering in line with plan. Divisional offices have been reduced to 32 from 41, central functions consolidated and purchasing harmonised. Incremental synergy savings of about £50m are expected to land in FY26’s adjusted PBT (cumulative £70m), with the original £100m run-rate target by HY28 unchanged.
On efficiency, adjusted admin expenses before PPA fell to £184.7m (HY25 aggregated: £195.4m) despite wage and NI pressures. Operationally, modern methods of construction are moving the needle too: 34.7% of homes used MMC and 30.6% used timber frame in the half, supporting speed, cost control and embodied carbon reductions.
Building Safety, CMA and Other Notes
- Building safety provision stands at £828.9m; spend was £73.4m in the half. No new issues required an increase in the building safety provision.
- Reinforced concrete frame provision was £186.7m; spend £4.4m in the period, with heavier outflows expected in FY27-FY28.
- The CMA investigation has concluded with no finding of infringement; the group’s £29.0m voluntary payment was agreed in FY25.
- Dividend policy moves to 2.0x ordinary dividend cover. Interim dividend is 5.0p, and the £100m FY26 buyback programme continues.
Outlook and Guidance: Volumes Held, Costs Edging Lower
Management repeats FY26 completion guidance of 17,200-17,800 (including c.600 JV completions) and expects adjusted PBT before PPA to land within the current consensus range. Underlying build cost inflation is now guided at c.2% for FY26, helped by procurement synergies. Year-end net cash is guided to £400m-£500m.
The big swing factor remains the Spring selling season. Private forward sales are lighter, but the affordable book is stronger and outlet numbers should stabilise this year before growing into FY27-FY28.
My Take: Positives, Watch-outs and Why It Matters
What looks good
- Delivery amid headwinds: Completions up 4.7% with stable underlying reservation rates and forward sales slightly ahead in total value.
- Synergies doing real work: Admin costs down and a clear glidepath to £100m cost synergies by HY28.
- Balance sheet discipline: Land buying calibrated to the cycle; year-end net cash guidance of £400m-£500m supports dividends and buybacks.
- Operational quality: 115 NHBC Pride in the Job awards, 5-Star HBF rating, and sustained CDP A List status underpin brand strength.
What to watch
- Margins: Adjusted operating margin before PPA at 8.0% shows incentives are still doing the heavy lifting. Any pricing wobbles would hurt.
- Private order book: Down 11.2% by units at 1 February. Execution through Spring is key to hitting the top end of completions guidance.
- Working capital: Lower net cash reflects deliberate investment in build and outlets. It should unwind with H2 completions, but needs monitoring.
- Legacy remediation: Provisions are unchanged within estimates, yet timing and cash phasing – especially for reinforced concrete frames – skew to FY27-FY28.
Bottom line: this is a credible, “hold-the-line” half. The enlarged group is absorbing margin pressure with cost savings, keeping volume guidance intact and preserving capital returns. If the Spring selling season holds up and cost inflation stays near 2%, margin rebuild into FY27 looks achievable – with Redrow synergies providing a helpful tailwind.
Quick Jargon Buster
- Reservation rate: Weekly net private sales per active outlet. A simple pace indicator.
- PPA (purchase price allocation): Accounting adjustments from the Redrow acquisition that temporarily depress reported margins as fair value uplifts unwind.
- PRS/MUS: Private Rental Sector and other multi-unit sales – bulk deals that can boost volumes but are lumpy.
- Adjusted vs statutory: “Adjusted” strips out one-offs (like integration costs and legacy building safety finance charges) to show underlying trading.
