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| Berkeley Group boosts profits by 34% Berkeley Group boosts profits by 34% | |
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| Housebuilder Berkeley Group has bolstered profits by a third despite seeing demand take a hit from Brexit uncertainty, rising stamp duty and the “extraordinary attack” on buy-to-let landlords. | Housebuilder Berkeley Group has bolstered profits by a third despite seeing demand take a hit from Brexit uncertainty, rising stamp duty and the “extraordinary attack” on buy-to-let landlords. |
| The group, which is focused on London and the south-east, recorded a 34% rise in pre-tax profits to £392.7m in the six months to the end of October, up from £293.3m over the period last year. | The group, which is focused on London and the south-east, recorded a 34% rise in pre-tax profits to £392.7m in the six months to the end of October, up from £293.3m over the period last year. |
| The earnings boost came as the firm sold fewer homes at a higher price, with 2,076 homes sold at an average selling price of £655,000 over the period, compared with 2,091 homes sold for an average £506,000 last year. | The earnings boost came as the firm sold fewer homes at a higher price, with 2,076 homes sold at an average selling price of £655,000 over the period, compared with 2,091 homes sold for an average £506,000 last year. |
| However, chief executive Rob Perrins said underlying demand was 20% lower compared with the same period last year. | However, chief executive Rob Perrins said underlying demand was 20% lower compared with the same period last year. |
| “This fall in volume is due to higher stamp duty, the extraordinary attack on buy-to-let landlords – such an important part of sustaining the London market and increasing the supply of new homes – and the uncertainty caused by Brexit.” | “This fall in volume is due to higher stamp duty, the extraordinary attack on buy-to-let landlords – such an important part of sustaining the London market and increasing the supply of new homes – and the uncertainty caused by Brexit.” |
| He said the drop in reservations was in line with the beginning of the year and there were signs that the market had started to adjust to the pressures. | He said the drop in reservations was in line with the beginning of the year and there were signs that the market had started to adjust to the pressures. |
| Revenues rose 34% to £1.4bn for the half year, up from £1.1bn over the period in 2015. | Revenues rose 34% to £1.4bn for the half year, up from £1.1bn over the period in 2015. |
| The firm said it was on track to hit its three-year pre-tax profit target of £2bn, first outlined in May last year. | The firm said it was on track to hit its three-year pre-tax profit target of £2bn, first outlined in May last year. |
| It also announced a new target to haul in £3bn of pre-tax profit for the five years from 1 May 2016. | It also announced a new target to haul in £3bn of pre-tax profit for the five years from 1 May 2016. |
| Perrins also cited the US election as a factor adding to the uncertainty hitting the housing market, but said pricing remained resilient and was above its business plan levels. | Perrins also cited the US election as a factor adding to the uncertainty hitting the housing market, but said pricing remained resilient and was above its business plan levels. |
| Berekely Group was demoted to the FTSE 250 in September after its stock price took a hammering following Britain’s vote to leave the European Union. | Berekely Group was demoted to the FTSE 250 in September after its stock price took a hammering following Britain’s vote to leave the European Union. |
| Shares were up nearly 4% during morning trading on the London market, but still remain around 22% lower than before the Brexit vote. | Shares were up nearly 4% during morning trading on the London market, but still remain around 22% lower than before the Brexit vote. |
| The group said it would change a five-year dividend plan announced prior to the EU referendum and would now return some of the cash through share buybacks and dividends. | The group said it would change a five-year dividend plan announced prior to the EU referendum and would now return some of the cash through share buybacks and dividends. |
| It said it had taken the step because the “current heightened macro uncertainty has led to significant market volatility and there is a dislocation between this and both underlying market conditions and the strength of Berkeley’s operating model”. | It said it had taken the step because the “current heightened macro uncertainty has led to significant market volatility and there is a dislocation between this and both underlying market conditions and the strength of Berkeley’s operating model”. |
| Last month, fellow housebuilder Taylor Wimpey said the housing market had been “robust” since the Brexit vote, but revealed a rise in cancellations and a slight fall in sales. | Last month, fellow housebuilder Taylor Wimpey said the housing market had been “robust” since the Brexit vote, but revealed a rise in cancellations and a slight fall in sales. |
| The High Wycombe-based firm sold 0.70 homes per site per week in the second half of the year, down from 0.74 over the period in 2015. | The High Wycombe-based firm sold 0.70 homes per site per week in the second half of the year, down from 0.74 over the period in 2015. |
| Cancellation rates ticked up to 13% for the year to 14 November, compared with 11% in 2015. | Cancellation rates ticked up to 13% for the year to 14 November, compared with 11% in 2015. |
| George Salmon, equity analyst at Hargreaves Lansdown, said: “While Berkeley’s generous capital returns plan has been amended this morning, the change is in how the group will be returning cash to shareholders, not how much. | George Salmon, equity analyst at Hargreaves Lansdown, said: “While Berkeley’s generous capital returns plan has been amended this morning, the change is in how the group will be returning cash to shareholders, not how much. |
| “The group is diverting some of the cash previously earmarked for dividend payments to share buybacks, which will boost the value of shares that remain on the market. | “The group is diverting some of the cash previously earmarked for dividend payments to share buybacks, which will boost the value of shares that remain on the market. |
| “With the shares down almost 20% since the Brexit vote, Berkeley says this option represents better value for shareholders at the current time. | “With the shares down almost 20% since the Brexit vote, Berkeley says this option represents better value for shareholders at the current time. |
| “This sends a clear message out that Berkeley feels its own stock looks cheap at the moment. | “This sends a clear message out that Berkeley feels its own stock looks cheap at the moment. |
| “With significant uncertainty around the London property market, this confidence is reassuring for investors.” | “With significant uncertainty around the London property market, this confidence is reassuring for investors.” |