Berkeley Group profits fall as it lays out strategy
By Josh White
Date: Friday 06 Dec 2024
(Sharecast News) - Berkeley Group reported a pre-tax profit of £275.1m for the six months ended 31 October on Friday, a 7.7% decline compared to the prior year.
The FTSE 100 housebuilder said basic earnings per share fell by 5.8% to 186.6p, while its operating margin improved by 0.7 percentage points to 20.2%.
Despite the softer profit figures, Berkeley reaffirmed its guidance for both the 2025 and 2026 financial years.
Sales during the period remained consistent with 2024 levels, with a slight improvement in recent weeks.
Pricing was resilient, while build costs were stable with minimal inflation, though the firm said it remained vigilant to macroeconomic risks.
Operating costs were in line with the previous year.
Berkeley recorded £474m in net cash after shareholder returns of £242m during the period.
It said liquidity totaled £1.7bn, including £1.2bn of borrowing capacity, while its net asset value per share rose to £34.47.
The group announced its 'Berkeley 2035' strategy, a long-term plan to enhance resilience and capital flexibility across land investments, its build-to-rent (BTR) platform, and shareholder returns.
It said it was on course to complete a £283m annual shareholder return by September, including a 33p interim dividend payable in March.
Berkeley said it delivered 2,103 homes during the period, with an additional 177 from joint ventures, a significant increase from the 1,785 homes delivered in the prior year.
Over 92% of those were built on brownfield land.
The group also committed over £300m toward affordable housing subsidies and community infrastructure benefits.
"Despite ongoing geopolitical and macroeconomic volatility, we remain on track to achieve our pre-tax profit guidance of £525m for the full year and at least £450m for 2026," said chief executive officer Rob Perrins.
"We are also on target to complete the final annual £283m payment under the current shareholder returns programme by 30 September 2025.
"There is good underlying demand for our homes, but transaction volumes remain around a third lower than 2023."
Perrins said that while there had been a slight uptick in recent weeks, a meaningful recovery would require a sustained improvement in consumer confidence and stability in the wider macroeconomic environment.
"As previously announced, pre-tax return on equity will dip below Berkeley's long-term target of 15% at the above levels of profitability, due to the impact of the operating environment and market conditions of recent years on our industry and the wider economy."
At 0819 GMT, shares in Berkeley Group Holdings were down 1.68% at 4,098p.
Reporting by Josh White for Sharecast.com.
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