Profit slides at Berkeley Group

7 December 2018

Tony Pidgley

Housebuilder Berkeley Group’s pre-tax profit dipped by more than a quarter in the half-year to 31 October 2018, amid a lack of ‘urgency’ in the housing market in London and the South East.

The firm made a pre-tax profit of £401.2m in the six months to 31 October 2018, down from £539.9m in the same period the year before. Revenue fell by 0.7% to £1.65bn, down from £1.66bn.

Nonetheless, it announced it was increasing its pre-tax profit guidance for the current year by at least 5% and now anticipates a similar split between the first and second half to last year when 55% was earned in the first six months of the year.  

Berkeley delivered 2,037 homes during the most recent half-year at an average selling price of £740,000 (compared to £721,000 in 2017).

Meanwhile, the firm’s chairman Tony Pidgley said he saw “opportunities to invest in today’s market” and announced plans to drive new developments, with 11 sites added to the company’s land holdings in the period, two of which are in Birmingham.

Chief executive Rob Perrins heralded a “good start” to the year. He said trading conditions remained consistent with the last 18 months, reflecting a "market in London and the South East that lacks urgency".

He added: “This is in the context of a short-term outlook that is clearly uncertain due to the ongoing Brexit process and a number of headwinds in the operating environment in London and the South East. This uncertainty affects sentiment and confidence which has a consequential adverse impact on investment levels and transaction volumes with a number of developers withdrawing from these markets.

“However, we are confident that London will remain a vibrant, tolerant and diverse global city, attractive both domestically and internationally where the cumulative demand for new homes is only increasing.

“With net cash of over £850 million and forward sales of £1.9bn, this is an environment in which Berkeley has the long-term operating model and expertise to invest; in both new opportunities and our own regeneration sites which we are bringing through to delivery."

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