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Berkeley raises guidance up to 2025 on ‘excellent visibility’

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The housebuilder upgraded its earnings forecast by 5% for the current financial year and by 5% per annum for the following three years

The Berkeley Group Holdings PLC (LSE:BKG) raised its profit forecast for this and the following three years after strong growth in new home sales boosted profit and revenue in the first half.

The housebuilder upgraded its earnings expectation for the current financial year to April 2022 by 5% from its previous guidance, which was for pre-tax profits to be at a similar level to last year’s £518.1mln.

Furthermore, as a result of “excellent visibility” in its delivery pipeline and the recovery of sales to pre-pandemic levels, Berkeley increased its pre-tax profit forecast 5% a year for the next three financial years. This would see the group deliver pre-tax profits of around £625mln for the year ending 30 April 2025.

Berkeley announced pre-tax profit of £290.7mln for the six-month period to 31 October 2021, up from £230.8mln in the same period last year. 

Revenue grew by 36.3% to £1.22bn, driven by new home sales in in London and the South East, and included £1.19bn of residential revenue, which rose from £894.8mln in the year-ago period.

New home sales increased to 1,828 homes from 1,104, while the average selling price fell to £647,000 from £799,000, reflecting the mix of developments. 

Berkeley said the value of underlying sales reservations in the last six months was slightly ahead of the two years preceding the Coronavirus (COVID-19) pandemic, which means that last year’s 20% sales drop resulting from the pandemic was fully reversed in first half of this year. 

The group said it has a portfolio of 64 live projects, which include 30 long-term, highly complex regeneration sites, of which 25 are in delivery.

It expects a 50% increase in housing delivery by 2024/25 compared with 2018/19 levels

The group has around 7,000 plots on sites that are expected to come into the land holdings by the end of next financial year, giving it good visibility on achieving its long-term target of increasing future gross profit in the land holdings to £7.5bn.

It anticipates a net investment of £700mln over the next two and a half years, split evenly between land and work in progress.

Berkeley reaffirmed its commitment to returning £282mln per year to shareholders up to 30 September 2025, with the next £141mln return due for the six months ending 30 September 2022.

Net cash stood at £845.5mln at the end of October, compared with £1.13bn on 30 April. 

Commenting on the results, chief executive Rob Perrins said: “This is a strong set of results, including enhanced returns for our shareholders.  High standards of design and place-making continue to differentiate our homes and neighbourhoods, excite customers and deliver a range of positive outcomes for our stakeholders.”



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