Portfolio

Berkeley profits slide as Brexit woes hit property sales

By Duncan Ferris

Date: Friday 06 Dec 2019

Berkeley profits slide as Brexit woes hit property sales

(Sharecast News) - Interim profits at Berkeley Group fell by a third as Brexit worries continued to plague the housing market, although the company said the fall was in line with forecasts.
The property developer and homebuilder on Friday said pre-tax profits fell 31% to £276.7m for the six months to October 31 as revenue slumped by to £930.9m.

However, Berkeley said the reduction had been anticipated, reflecting the completion of several London-based developments acquired from 2009 - 2013.

The company completed 1,389 homes during the period, down by 30%. The average property selling price fell 13% to £644,000 on Brexit uncertainties, while Berkeley also cited its involvement in 25 large regeneration schemes that offer lower prices than other projects undertaken in recent years.

Chief executive Robert Perrins said the company had made a "good start to the year" and was on course to hit its six year pre-tax profit target of £3.3bn.

"We remain alert to market risks with a General Election next week and the delay to the UK's proposed exit from the European Union prolonging the uncertain operating environment of the last three years," he added.

"This is damaging to our economy and London where fewer developers are prepared or able to accept the high operational risk of bringing forward new homes, with supply falling as a consequence."

CMC Markets analyst David Madden said the figures "paint a picture of cooling in the house building sector".

"Political uncertainty on account of the UK's planned exit from the EU, combined with high levels of personal debt has prompted some potential house buyers to hold-off purchases."

"On the bright side, gross margin improved to 36.1% from 29.2%, which is impressive in the current environment. The firm also maintained its medium-term profit guidance despite today's not-so hot numbers."

Berkeley Group shares were down by 0.33% at 4,534.00p at 0817 GMT.

(Writing by Frank Prenesti; Editing by Michele Maatouk)

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