Higher sales prices are offsetting higher costs, meaning Berkeley’s on track to meet its full year profit target. Pre-tax profit’s expected to be £600m this year, rising to £625m in 2024.
Forward sales rates are expected to be “marginally” ahead of last year’s £2.17bn, with the group seeing a “good level” of demand.
Berkeley warned the operating environment remains volatile, with cost inflation running at 5-10%. Because of this Berkeley will be more selective in buying any new land.
Around £38m of share buybacks has been completed, as part of the new £141.1m shareholder return plan. The amount to be paid as a dividend will be announced before the end of February 2023.
The shares rose 3.6% following the announcement.
Sophie Lund-Yates, Lead Equity Analyst at Hargreaves Lansdown:
“Berkeley Group has put in a resilient showing, despite soaring cost inflation which is marring the entire sector. The reason profits have been left without too much bruising is because sale prices are high enough to offset the housebuilder’s fatter bills. This is a dynamic being seen almost across the board, but the longevity of the pattern is a question mark for Berkeley. It’s south-east focus, and more premium product, means starting prices for a Berkeley home are significantly more than for run of the mill developers.
On one hand, this makes the group more vulnerable to a prolonged recession, as a £700,000 family home in the commuter belt is precisely the sort of thing people put off committing to when things are rocky. At the same time, these higher earners are less likely to feel the worst of the affects of a crisis, so may well prove to be a more reliable customer base. There should be cautious optimism in the latter scenario, but the market is clearly concerned, with the shares changing hands for a bit less than the longer-term average.”
