Analysts say builder’s profits ‘could be in peril’ in FY27
Barratt Redrow has reduced its housebuilding targets for the coming year, despite posting a resilient financial performance in FY26.
In its second set of annual results since a £2.5bn merger in 2024, the housebuilder said it expected to build between 17,500 and 17,900 homes in FY27.
It said this downward adjustment, from previous guidance of 17,700-18,200, reflected “continued planning delays and a consequent reduction to expected sales outlet openings”.
This despite the housebuilder recording a relatively strong performance in this year’s figures.
In the 52 weeks to 28 June 2026, Barratt Redrow built 17,667 homes and generated £6.1bn in revenue - up from 16,826 and £5.68bn respectively.
Statutory pre-tax profit was up 48% to £364m from £245m, on the back of a “reduced impact from Redrow transaction and integration costs and purchase price allocation adjustments”.
However, its adjusted pre-tax profit, before the impact of fair value adjustments recognised as a result of the Redrow acquisition, fell from £617m to £573m.
Duncan Ferris, analyst at Freetrade, said that while the headline numbers had met expectations, “next year’s potential for slowing completions looks a troubling snag”.
He noted that gross margins had slid significantly in the year, “indicating the business paid a pretty hefty cost to get completions over the line”, and said that if this persisted alongside slowing or declining completions, “profits may be in peril”.
A note from analyst Peel Hunt said it expected consensus profit expectations “to fall by 3-6% for FY 27 on the revised volume guidance, which we expect will also impact margins”.
“Without better news on the interest rate front or some unexpected help from the Government, it looks like Barratt Redrow and the rest of the sector is in for a long, slow recovery,” it said.
The housebuilder itself, in the financial statements, called on the government to “take action to support demand, particularly for first-time buyers” and to address “the increasing regulatory and tax burdens which constrain our industry”.
The results also revealed that the integration process with Redrow had completed in the year, with £73m cost synergies delivered and the remaining £27m needed to meet targets expected to materialise in FY27.
Barratt Redrow recognised additional building safety provision charges totalling £97m during the year, but recovered £38.4m from third parties through legal action “in respect of issues around fire safety and reinforced concrete frames”.
The underlying net private reservation rate was up from 0.55 to 0.56, while the overall net private reservation rate was 0.64, compared with 0.6.
The net private weekly reservation rate from 29 June 2026 to 6 September 2026 was 0.62.
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