Berkeley’s shares creep up on trading update

September 5, 2018 / Isla MacFarlane
Berkeley’s shares creep up on trading update

The FTSE 100 ended one per cent down today, however some housebuilders saw their stocks inch upwards following positive results and upbeat trading notices.

Berkeley’s shares gained 0.8% today, closing at 3,538.00 pence following a trading notice confirming that its profits were on track. However, this is a long way from the beginning of June when its shares were trading at a high of 4,321.00 pence.

“In the first four months of this new financial year, market conditions in London and the South East have remained consistent with those reported with the full year results in June,” the statement said. “Pricing has remained robust as there is demand for good quality, well located homes.”

However, it warned that the market “lacks urgency” and that London remains constrained by high transaction costs, restrictive income, multiple limits on mortgage borrowing and prevailing economic uncertainty, accentuated by Brexit.

“These headwinds affect all segments of the market from home movers to downsizers and investors alike,” it said. A “functioning housing market, where good new development can deliver much needed additionality across all tenures, requires conditions for growth and low barriers to entry which are currently absent from the housing market in London and the South East.”

In the current operating environment, Berkeley said it is finding opportunities to invest in and has acquired five new sites in the period. Subject to any large land transactions that might arise before 31 October 2018, Berkeley anticipates that net cash at the half year will be above the year-end position of £687.3 million.

“Taken together with trading in the first four months of the year, this strong financial position, coupled with the visibility provided by its forward sales and land bank, enables the Board to reaffirm its guidance to deliver at least £3.375 billion of pre-tax profits for the five year period from 1 May 2016 to 30 April 2021, with at least £1.575 billion pre-tax profit to be delivered in the two years ending 30 April 2019,” it said.

The company announced that a dividend of £44.0 million, or 33.30 pence per share, will be paid to shareholders. The remaining £139.2 million of the return for the six months ending 30 September 2018 have been satisfied through share buy-backs of £95.2 million.

Barratt also saw its shares rise 1.8%, after announcing a 9.2% rise in its pre-tax profits.

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