Housebuilder Berkeley backed its full-year profit outlook on Friday even as it posted a drop in first-half profits.
In the six months to the end of October, pre-tax profits dipped 2% to £284.8m as revenues fell 1.6% to £1.2bn. During the period, cash due on forward sales rose to £2.33bn from £2.17bn.
Berkeley said the value of underlying sales secured in the first half was 2% higher than the equivalent values secured in the financial year to 30 April on a like-for-like basis.
Chief executive Rob Perrins said: “Sales for the six months have been ahead of the same period last year, demonstrating the resilience of Berkeley’s core markets. This includes five weeks of trading since the end of September in which the value of underlying sales has been around 25% lower than the previous five months. Pricing has remained firm throughout.”
As a result of its forward sales at the start of the financial year and sales rates which have been ahead of last year, Berkeley still expects to deliver full-year profits in line with previous guidance of around £600m. However, the group cut its pre-tax earnings expectations for 2024 and 2025 to “at least” £1.05bn, down from previous guidance of around £1.25bn.
The company suggested it will be limiting new investments, focusing instead on existing sites.
“In the near-term, Berkeley will focus on matching production on existing sites to demand and delivering its forward sales over the period to 30 April 2025,” it said.
“Beyond this, the current operating environment, characterised by record levels of planning tariff within an increasingly complex and slow planning system, at a time of high build costs, increased regulation and higher corporation tax, alongside the RPDT and proposed new Building Safety Levy, will inevitably continue to see a reduction in supply of new homes in London and the South East. Berkeley’s delivery of new homes will therefore result in a reduction in its land holdings.”
