Berkeley Group PLC (LON:BKG) has posted a better-than-expected jump in full-year profits, reflecting a post-Brexit stabilisation of housing markets in London and the South-East, although the builder cautioned about greater uncertainties going forward.
For the 12 months to April 30, the FTSE 250-listed group reported at 53% rise in pretax profit to £812mln, up from £530.9mln a year earlier.
The builder said it sold 3,905 homes during the year, up 3.4% on a year earlier, while its average selling price increased by 31% to £675,000.
READ: Berkeley sees profits at top-end as London, south-east market stabilises
The firm added that forward sales at the year-end were down 16% to £2.74bn, from £3.25bn a year earlier.
But it said earnings for the current year were set to be at least level with last year, and reiterated its earnings guidance that it would make at least £3bn of pretax profit in the five years to April 2021.
However, the firm's chairman, Tony Pidgeley said: "Brexit and wider global macro instability impact both confidence and sentiment and will result in constrained investment levels."
He added: "This leads to greater uncertainty around the timing of delivery of homes from our land bank."
The group – which dropped out of the FTSE 100 index last year – is paying a total dividend of 185p, down 2.6% on last year’s 190p reflecting a policy shift to devote cash to share buybacks instead.
In early morning trading, Berkeley Group shares topped the FTSE 250 leader board, up 2.7%, or 87p at 3,314p.
In a note to clients, Liberum Capital’s analysts said: “The shares are on an unstretched valuation, at 2.0x book value, a narrower premium than usual, perhaps understandably given poor sentiment towards London housing.”
They reiterated a ‘hold’ rating and 3,169p price target on Berkeley Group.
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