Barratt Redrow announced a £90 million push to save costs as the businesses integrate, since the £2.5 billion merger after Barratt Developments acquired Redrow plc August.
Among the cost saving measures, Barratt Redrow plans to close nine offices across the country, streamlining the business across 32 divisions, which is expected to save £33 million, 37% of the £90 million target.
In an effort to save £34 million in costs (38 per cent) the housebuilder confirmed a review of procurement with the renegotiation of supplier contracts.
The third prong of the strategy is to through the consolidation of duplicated central and support functions, expected to save £23 million (25 per cent)
The Competition and Markets Authority (CMA) cleared the £2.5 billion merger after Barratt completed its acquisition of Redrow on 21 August.
In September, Barratt confirmed a “challenging year” for housebuilders led to revenue and profits falling, in its latest financial results.
Revenue for the year to 30 June 2024 was £4.2 billion, down 21.7 per cent from £5.3 billion in the previous year, generating £170.5 million in pre-tax profits, 75.8 per cent plummet from £705.1 million in 2023.
In terms of Barratt’s stand alone performance, the housebuilder saw a dip in total home completions from 1 July 2024 to 13 October 2024 Barratt with 8,172 homes (15 October 2023: 9,284 homes).
Meanwhile, combined trading between Barratt and Redrow from 22 August 2024 through to 13 October 2024 totalled 10,619 homes (15 October 2023: 12,201 homes) at a value of £3.2 billion (15 October 2023: £3,317.7m).
Barratt Redrow now expects to deliver total home completions of between 16,600 and 17,200 in FY25.
Chief Executive David Thomas said: “Whilst customer demand continues to be sensitive to the wider economy, we are beginning to see more stable market conditions with increased mortgage availability and affordability.
“It will take some time for customer confidence to fully recover from the macroeconomic headwinds faced over the past two years, but we are encouraged by the solid trading we have experienced over recent weeks.
“This is an exciting new chapter for our business. Barratt Redrow is uniquely well-positioned to meet the need for new homes of all tenures across the country.
“We have superior scale, with a differentiated multi brand offering that can be deployed across our strong combined land portfolio.
“We begin this journey with a strong balance sheet, a solid forward sales position and the ability to add significant value through cost and revenue synergies.
“We look forward with confidence to delivering a smooth and efficient integration process, and to capturing the enhanced growth opportunities ahead of us.”
Was this interesting? British Land names next CFO
If you have a tip or story idea that fts with our publication, please contact the news reporter miles@wavenews.co.uk
Get industry news in 5 minutes!
A daily email that makes industry news enjoyable. It’s completely free.
