Berkeley Group Holdings PLC (LSE:BKG) shares fell 9% on Friday after the company reported full-year results broadly in line with expectations but downgraded its profit guidance for 2026 and 2027.
The softer outlook dragged down other major housebuilders, with the sector feeling the chill.
The London-focused developer posted a pre-tax profit of £529 million, down 5% from last year, despite a small revenue increase to £2.49 billion from selling just over 4,000 homes.
Operating profit edged up 4%, but profits from joint ventures took a hit, pulling overall earnings lower. Berkeley ended the year with £337 million in net cash, down from £532 million, while net asset value grew 7% to £35.95 per share.
A key concern is the drop in forward sales by £300 million to £1.4 billion and a slight contraction in future gross margins, reflecting tougher market conditions. The company also shifted some homes into its build-to-rent platform and added new sites and planning consents.
Looking ahead, Berkeley now expects pre-tax profits to fall to around £450 million in both 2026 and 2027, down from earlier forecasts of roughly £475 million. This reflects increased competition and the need for higher sales incentives to move properties.
Despite the share price slip, Berkeley’s shares remain up 10% year-to-date, trading at about 1.2 times projected net asset value for 2025 and offering a post-tax return on equity above 10%.
Peel Hunt repeated its 'add' and 4,400p price target. The shares fell 298p to 3,852p, dragging Persimmon and Taylor Wimpey with it.