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Housebuilder Berkeley sees profits at top-end as London, south-east market stabilises post-Brexit vote

The firm said overall underlying reservations in the seven months since the immediate Brexit referendum effect are down 16% on the comparable period last year, although the last two months have been ahead of last year
Housebuilding
Berkeley added: “Enquiry levels remain robust, cancellation rates are at normal levels and pricing continues to be resilient and above business plan levels”

Housebuilder Berkeley Group Holdings PLC (LON:BKG) expects its full-year profits to be at the top-end of analysts expectations and said the housing market in London and the South East has now stabilised, although underlying sale reservations are lower

In a trading update for the four months to February 28, the FTSE 250-listed firm said overall underlying reservations in the seven months since the immediate Brexit referendum effect are down 16% on the comparable period last year, although the last two months have been ahead of last year. 

Berkeley, however, added: “Enquiry levels remain robust, cancellation rates are at normal levels and pricing continues to be resilient and above business plan levels.”

The group said forward sales are expected to be in excess of £2.6bn as at April 30 at the prevailing sales rate and Berkeley remains ungeared.

The housebuilder said: “Pre-tax profits for the year ended 30 April 2017 are expected to be at the top end of analysts' expectations, with the actual outturn dependent upon completion timing on Berkeley's larger developments.  A similar level of profitability is anticipated for the year ending 30 April 2018.”

Ambitious target …

Berkeley added that it is in a strong position and remains “on target to meet its ambition to deliver at least £3.0bn of pre-tax profit over the five years ending 30 April 2021.”

The firm said it is currently onsite in production on 58 sites in London and the south east of England, and is well placed to maintain its high levels of production.

It added that there are a further 22 sites which are in the planning process or at which it is unable to start onsite due to a number of pre-commencement issues.

In early trading, Berkeley shares jumped 6%, or 183p higher to 3,146p.

George Salmon, equity analyst at Hargreaves Lansdown, said: “In many ways the update is more than just resilient.

“After recently amending the shareholder return plan to include buybacks to take advantage of a depressed share price, the London-focussed housebuilder is now telling analysts to up their profit forecasts for this year and next.”

He added: “While reservations are significantly down year-on-year, the uncertainty caused by the Brexit vote and the changes in stamp duty mean this is no surprise.

“Investors should take heart from the news that reservations in the last two months are up on the comparable period last year.”

 -- Adds shares price, broker comment --

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