Housebuilder Redrow has warned that its full-year margins will be down in a stock market announcement today.
Sector gloom was exacerbated by reports that the number of homes sold by the developer almost halved in the second half of 2008.
It completed 1,042 new homes in the last six months, compared with 2,111 in the previous half-year, with forward sales down by 40%.
Only 853 houses were sold in the period, down from 1,657 last year.
Redrow said its short-term focus remained on the management of its cost base and cashflow adding that, over the last six months, it has made a “significant reduction in headcount” of around 40% – 500 jobs – and closed two offices.
It had reduced its net debt to just under £270m by the end of December, and received £27.5m in tax repayment.
Redrow said it was now “well placed” to meet its target to reduce its debt to £225m at June 2009.
The stock market announcement said: “The level of consumer confidence and the condition of the lending markets lead us to conclude that the trading environment will continue to be extremely difficult in 2009.
“We have continued to experience pricing pressure which has been evident in all the leading house price indices and we expect pricing to remain uncertain in the coming months.
“In this context, coupled with our ongoing prioritisation of cash generation, it is our current view that gross margins for the full year will be adversely affected by approximately 5 percentage points as compared with management’s previous expectations.”
Redrow said it was be “difficult to assess” when the housing market might improve.
Shares in the housebuilder fell by 7% following the trading update
Other housebuilders also suffered following a series of bad news for the sector, including a trading statement from Taylor Wimpey yesterday that warned of the need for further writedowns to the firm’s land bank.
Barratt fell by 13.17%, Bovis by 4.59% and Persimmon by 3.41%.
Redrow’s interim results for the six months ended 31 December 2008 will be released on 24 February.
