September 4, 2018 / 6:30 AM / 10 months ago

Housebuilder Redrow says demand robust despite Brexit, profit jumps

(Reuters) - Demand for new homes in Britain remains robust despite uncertainty over the country’s departure from the European Union, housebuilder Redrow (RDW.L) said on Tuesday, as it beat full-year profit forecasts.

The company logo of construction company Redrow is pictured on a flag at a new housing development near Manchester northern England, April 7, 2016. REUTERS/Phil Noble

The company, which has risen to be one of Britain’s biggest homebuilder in the 40 years since it launched its first major project in North Wales in 1979, warned of potential construction labour shortages after Brexit in March next year, which is likely to end freedom of movement between Britain and the EU.

It also appealed to the government to keep its Help to Buy subsidy scheme for first-time buyers in place, saying it was important to prop up market sentiment. Media reports this week have said the scheme could be scrapped in 2021.

“(It would be a) ridiculous thing that you would do on something that has been hugely successful,” Chief Executive John Tutte told a media call.

“If we don’t build enough houses we get criticised, if we build enough houses and make some profit we get criticised and they say Help to Buy is lining housebuilders’ pockets.”

Redrow’s pretax profit jumped 21 percent to 380 million pounds in the year ended June, beating analysts’ average forecast of 361 million pounds, according to Thomson Reuters I/B/E/S.

UK house prices, on a tear for most of the past 25 years, have softened in the past year as the government struggled to find its way through Brexit talks and speculation mounted that thousands of financial and other jobs could leave the country.

“There is no doubt that clarity over Brexit and the future of Help to Buy would improve market sentiment,” Chairman Steve Morgan said in a statement.

Tutte pointed to concerns over the supply of skilled and unskilled eastern European construction labour that has supported the industry’s growth in recent years.

The number of people working in the UK from the eight east European countries that joined the EU in 2004 fell by 117,000 between April-June 2017 and April-June 2018 to 880,000, according to the Office for National Statistics.

“For us it is more about concerns about market sentiment than it is about having a direct impact. Other than in London, where in particular, we do have quite a reliance upon a foreign labour force, particularly from eastern Europe,” Tutte said.

“... You’ve got the workers that tend to come here on a temporary basis, and I think they are the ones that are more under threat,” he said.

Reporting by Noor Zainab Hussain in Bengaluru; Editing by Amrutha Gayathri and Mark Potter

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