Berkeley Group’s profit before tax rose 4.6% to £298m in the six-month period ended 31 October, but the company delivered fewer homes and said net reservations were down significantly.
In the reporting period, Berkeley built 1,785 new homes compared with 2,080 in 2022. The company said net reservations in the six-month period were one third lower than the average rate throughout 2023, “reflecting the sharp increase in interest rates and the ongoing elevated political and macro volatility”, and warned the sales market will “remain subdued”.
It added that one of the biggest supply chain risks to the business was contractor insolvencies and said a major obstacle to future housing delivery was the “highly complex, uncertain and unpredictable” planning and regulatory environment.
At the end of October, the company said it had net cash in excess of £400m, cash due on forward sales of £2bn and land holdings future gross margin of £7.2bn.
Rob Perrins, chief executive of Berkeley Group, said: “Berkeley has demonstrated the resilience of its uniquely long-term business model with today’s strong results and is extending its guidance a further year to cover the period to 30 April 2026. Over the current and the next two financial years, Berkeley is targeting the delivery of at least £1.5bn of pre-tax profit and the maintenance of net cash above £400m.
He added: “In the six months, we have delivered 1,785 new private and affordable homes, of which 87% are on brownfield land, and provided over £250m in subsidies to deliver affordable housing and commitments to wider community and infrastructure benefits, more than 100% of the post-tax profit generated in the period.
“Despite urban regeneration being a clear national priority, it has become increasingly difficult to progress this form of development as changes to planning, tax and regulatory regimes have created an increasingly uncertain, unpredictable and burdensome environment. This is driving investment away from urban areas, restricting growth and preventing homes and other tangible benefits being delivered. It will lead to lower productivity, fewer jobs being created and net zero being harder to achieve, as the efficient re-use of land in urban settings to deliver, well-connected, nature-rich new communities, near existing infrastructure is the most sustainable form of development.
“In today’s environment, Berkeley will intensify its disciplined approach to operating cost control and work in progress investment, while continually looking to identify the best development solution on each of its sites for the benefit of all its stakeholders. We are ready and able to deploy capital into new opportunities once the market and regulatory cycles inflect and returns can be earned commensurate with the level of upfront investment and operational risk we undertake.”
In their analysts’ note, Peel Hunt said: “We continue to believe Berkeley is a very well-run business, which continues to focus hard on medium- to longer-term value generation and shareholder returns in particular. In the short term, there are probably better value plays in the sector, but for those with long-term investment horizons, Berkeley should remain of interest. We reiterate Add. TP 3,900p.”
