Tuesday, February 24, 2009

Redrow in the red and making 10% further cut in construction costs

Redrow has dived into the red over the past six months to the tune of £46m adding to the last full-year’s pre-tax loss of £190m.

The house builder’s latest figures cover the six months to 31 December 2008.

Redrow’s statistics highlight the turmoils of the current housing market:

completions - 1,000 (down from 2,100 in the same period in the previous year)average selling price - £140,000 (down from £163,000)net debt – £270m (up from £240m)

There is squeeze on costs with Redrow stating: “We are achieving reductions in construction costs as new subcontract orders are being placed at significantly lower rates and material costs have eased.

“We estimate that like for like house-build costs have reduced by approximately 10% as compared with a year ago.”


Redrow in the red and making 10% further cut in construction costs


The latest pre-tax loss of ВЈ46m was the result of an operating loss of ВЈ21m together with a ВЈ25m exceptional item. The latter was made up of a restructuring cost as well as a provision against the drop in valuations of assets.

During July and August 2008 two operating divisions were closed – based in Wakefield and Northampton. The result was 350 job losses.

Redrow has had to cut again. It said: “In response to lower levels of construction activity we revised operational practices to reduce site related costs resulting in additional redundancies.

“In the twelve months to December 2008 we reduced our headcount by 43% to 740 employees.”

The cost of the steps taken in the first half of the financial year was ВЈ3.1m and has been included in the latest accounts.

There will be a further exceptional charge in the six months to June 2009 of ВЈ1.8m in relation to the further rationalisation of the cost base which was implemented in early 2009.

That runs to a further 190 job losses.

Redrow said: “Following the conclusion of this rationalisation our total number of employees will be close to 650.” 

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