Barratt Redrow to return £400 million to shareholders via buybacks

By Simone Lobo

July 15 (Reuters) - Barratt Redrow said on Wednesday it would return £400 million ($536 million) to shareholders via buybacks, boosting the homebuilder's shares after it forecast annual profit in line with expectations.

Shares in Britain's largest homebuilder rose as much as 6% in early trade as investors welcomed the policy, which promises more buybacks and only a nominal dividend as the stock trades at a discount to its tangible net asset value.

"Despite continued improvements in mortgage availability this year, consumer sentiment remained cautious, particularly after the start of the conflict in the Middle East... continuing to pressure affordability," Barratt said in a statement.

CEO David Thomas told investors that uncertainty around policy shifts, particularly at the local level, had impacted the first half of the year, with improvements expected in the second half and 2027 following new British legislation passed last December.

Shares pared gains later in the day, but were still up 3.7% by 1348 GMT.

Barratt, like its rivals, has curbed land spending, closed sales outlets and cut costs as rising building expenses and inflation risks linked to the Iran war squeeze margins and increase caution and affordability concerns among British home buyers.

The company will pay a nominal 1 pence per share as its 2026 and 2027 interim ordinary dividend, with the bulk of the promised £400 million return to shareholders to be made via share buybacks instead.

The new buyback comes as Barratt prepares for a major leadership overhaul, with Dean Banks set to succeed Thomas as CEO in September.

The company forecast total home completions of 17,667 units for the year ended June 28, slightly ahead of market expectations, with adjusted pretax profit seen in line with consensus of £559.5 million.

For fiscal 2027, Barratt expects to deliver 17,700 to 18,200 units, with cost inflation seen at 3% to 4% as the wider industry grapples with a slowdown spurred in part by rising energy costs.

"We have ongoing year-round negotiations and conversations with our supply chain partners, and the deals that we strike are not all at one point," Chief Operating Officer Mike Roberts told investors, noting there was some headroom in the supply chain.

($1 = 0.7458 pounds)

(Reporting by Simone Lobo in Bengaluru; Editing by Subhranshu Sahu, Rashmi Aich and Jan Harvey)