Berkeley Group reports profits down in 'challenging' market conditions

Warren Lewis
20th June 2019
construction 665

Berkeley Group has seen another “solid performance” during its financial year, but with profits dropping 21% against 2018 as challenging market conditions continue for the housebuilder.

Pre-tax profit during the year ending April 30 2019 totalled £775.2 million. This was, however, an improvement on the prediction at the start of the year that profits would drop around 30% against the equivalent period in 2018, Berkeley stated. This better than anticipated result reflected “resilient trading” during the year, it added.

Revenue rose 4.1% to £2,957.4 million. The business delivered 3,698 homes during the period across London and the south east, slightly up on FY 2018’s 3,678.

The homes’ average selling price rose from £725,000 in 2018 to £748,000, due to the mix on Berkeley’s schemes in central London, it said.

Berkeley launched 11 new schemes during the year - three in London and the rest outside of the capital. It said that a number of new sites had moved into production, therefore it expected further launches during 2019/20.

It said that trading conditions and the value of new reservations secured continued to be stable, with 2019 “marginally ahead” of the previous year.
The business is currently 18% ahead of its plan to deliver £3 billion of pre-tax profit in the five years ending 30 April 2021.

But Berkeley also said that, in line with existing guidance, pre-tax profit for 2019/20 was set to fall by around a third against 2018/19.

Rob Perrins, Berkeley’s ceo, commented: “The operating environment has been uncertain for three years, since the United Kingdom chose to leave the European Union, resulting in a lack of visibility in the political outlook.

When seen alongside the increasing property tax burden since 2014, and a complicated, costly and bureaucratic planning system, it is unsurprising that both demand and supply are constrained at present.”

He said Berkeley was beginning the coming year “from a position of strength, with net cash of £975 million, forward sales of £1.8 billion and an estimated £6.2 billion of gross profit in our land holdings, and this means we can look beyond the current period of uncertainty with confidence".

Related articles
More from Business
Latest from Financial Reporter
Latest from Commercial Reporter