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British builders Galliford and Redrow to resume dividends

Pushkala Aripaka and Samantha Machado
·2-min read
FILE PHOTO: A builder assembles scaffolding as he works on new homes in south London

British builders Galliford and Redrow to resume dividends

FILE PHOTO: A builder assembles scaffolding as he works on new homes in south London

By Pushkala Aripaka and Samantha Machado

(Reuters) - Construction groups Galliford Try <GFRD.L> and Redrow <RDW.L> on Wednesday pledged to resume shareholder payouts in fiscal 2021 as construction demand picked up following the lifting of coronavirus lockdowns.

Britain's construction industry has recovered in the past few months, helping to boost building companies' order books.

Galliford expects to return to profitability after two consecutive years of losses as productivity neared normal levels, sending its shares up as much as 11%.

A year-on-year increase in its order book helped Galliford secure 90% of planned revenue for 2021, and the group is focusing on improving margins by opting for smaller contracts.

Homebuilder Redrow said a record order book plus its shift away from London would produce strong operating cash flow allowing dividends to resume in 2021, subject to market conditions.

Consumer demand after the COVID-19 pandemic has shifted, prompting Redrow to focus on regional businesses with higher returns and its 'Heritage' suburban homes with period style features and spacious interiors.

Redrow also reported a fall in home completions, lower revenue and higher costs, sending its shares as much as 3.8% lower at 440 pence by 0945 GMT.

But the company said it completed "substantially more" homes in the first few weeks of the new financial year compared to the same period last year.

Galliford, part of London's small-cap index <.FTSC>, in January sold its housing divisions to Vistry Group <VTYV.L>, a move that has been paying off.

"We have successfully transitioned to a well-capitalised UK construction business and I am confident about our future," said Bill Hocking, Chief Executive of Galliford, which expects revenue of 1.1 to 1.3 billion pounds ($1.4 to $1.7 billion) for fiscal 2021.

Peel Hunt analysts pointed to the company's "well-bid order book, attractive infrastructure markets and the sector-leading balance sheet."

Excluding one-time items, Galliford reported a pretax loss of 59.7 million pounds for the year ended June 30, while Redrow said pretax profit for the same period fell to 140 million pounds.

($1 = 0.7757 pounds)

(Reporting by Pushkala Aripaka and Samantha Machado in Bengaluru; Editing by Devika Syamnath/Rashmi Aich/Jane Merriman)