- On target to meet guidance for 2024-5
- Commitment to return £283 million to shareholders up to 30 September 2025
- Underlying private sales reservations 15% lower than 2021/22
Shares in housebuilder Berkeley Group (BKG) fell nearly 3% to £37.99 in morning trading despite reporting a 9.5% rise in pre-tax profits to £604 million for the year ending 30 April 2023 as it said its near-term market outlook remained uncertain.
Berkeley’s full year pre-tax profits were in line with both guidance of £600 million provided at the start of the financial year and analysts' consensus of £600 million.
The pre-tax full year profits were generated from the sale of 4,043 homes which was 7.5% higher year-on-year at an average selling price of £608,000 – a rise of 0.8% year-on-year.
ON TARGET FOR 2024 AND 2025
The company said it was ‘on target to meet guidance for the next two years and maintain shareholder returns.’
The housebuilder returned £253.9 million to shareholders for the year ending 30 April 2023, compared to £515.2 million in the same year ago period reflecting tough market conditions.
Rob Perrins chief executive remained upbeat about the group: ‘We remain focused on meeting our long-term pre-tax return on equity target of 15% across the cycle and delivering against our shareholder returns programme.’
BACKDROP OF RISING UK INTEREST RATES
Berkeley’s full year results come at a tricky time for the UK housing market with more interest rates rises on the horizon from the Bank of England to curb runaway inflation.
UK inflation is currently stuck at 8.7% in May, according to the latest data by the Office for National Statistics.
The rising UK inflationary and interest rate environment has had a knock-on effect for customer demand.
Underlying private sales reservations for 2022/3 were around 15% lower than 2021/22 on a like-for-like basis.
Perrins said: ‘In this type of market there is a lack of urgency and transactions typically stem from owner occupiers with a current motivation to move or investors with immediately available funds, with demand therefore weighted to product, which is closer to delivery, as opposed to off-plan sales that do not complete for two to four years. On this basis, at current sales rates, sales for 2023/24 will be around 20% lower than 2022/23.’
Berkeley also said the ‘future delivery of new homes is jeopardised by planning environment and regulatory uncertainty.’
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