Reports that London saw the lowest rate of house price growth in April - about 1% - will concern shareholders of Berkeley Group, the London-focused housebuilder.
The market is expecting the group to announce full-year profit before tax of around £905mln on revenue of £2.7bn. UBS is a bit more upbeat than the consensus, predicting profit before tax of £935mln on sales of £2.79bn.
Since the upturn in the housing market, fuelled by the “Help to Buy” initiative, the group has been very generous with its dividends and having paid an interim dividend of 56.75p in the current financial year, the expectation is that it will recommend a final dividend of around 115p, although some have suggested that the level of share buybacks this year means the final divi might be closer to 105p.
“We expect net cash to end at £740mln in FY18E, which provides the company with flexibility to invest opportunistically or return more cash to shareholders in due course,” UBS said.
The group has previously cautioned that rising costs, mortgage availability and economic uncertainty could put a crimp on its growth rate, so investors will be interested to see if there is any commentary on these issues, especially in view of the recent trading update from Crest Nicholson, which is also focused on the south-east of England and which recently complained of cost pressures.
Significant announcements expected
Finals: Berkeley Group PLC (LON:BKG), PLC (LON:BOTB), Severfield PLC (LON:SFR)
Economic data: CBI industrial trends survey; US existing home sales