But sales may plummet in the year ahead
Property developer Berkeley Group has announced robust financial results, posting a 9.5% increase in pre-tax profit to hit £604 million for the year to April 30, 2023.
The group’s forward sales totalled £2.1 billion, though the value of reservations for the financial year slid by 15%.
“Berkeley has delivered pre-tax profits in line with the guidance provided at the start of the financial year, maintained our shareholder returns program, and increased the net cash position,” Rob Perrins (pictured), chief executive at Berkeley, said in a statement.
“This is a very strong performance by our sales and construction teams, given market conditions and changing building regulations, and reflects the resilience of Berkeley’s business model with its focus on the country’s most undersupplied markets.”
Berkeley has reiterated guidance of delivering at least £1.05 billion of pre-tax profit across its next two financial years.
“Looking forward, we are well placed to meet our guidance for the next two financial years and continue investing in our existing regeneration sites but will remain cautious in committing to new investment until the conditions for growth are in place,” Perrins added.
Charlie Huggins, manager of the quality shares portfolio at investment service Wealth Club, agreed that while the results were solid for Berkeley, the near-term outlook was highly uncertain.
“In recent weeks, we have seen a significant rise in mortgage rates, and this has injected a further dose of caution among homebuyers and property investors,” Huggins noted. “This means Berkeley expects sales for the year ahead to be down around 20%.
“As a result, Berkeley is battening down the hatches. It has taken its foot off the investment accelerator and will prioritise cash and margins. This, combined with a healthy forward order book and a strong balance sheet, puts Berkeley in a good position to navigate these tougher times.
“Historically, Berkeley has always emerged from downturns stronger. For now, though, near-term prospects for Berkeley and its peers are murky at best. The recent increase in mortgage rates is far from helpful and with many home buyers still on cheap fixed rate deals, most of the pain has probably yet to be felt.”
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, Twitter, and LinkedIn.
