Berkeley Group warns profits to drop 30% next year

Aaron Morby 4 weeks ago
Share

London and south east house builder Berkeley Group said profits have peaked for the group, just short of the £1bn mark.

Chairman Tony Pidley says Berkeley has built up a £400m war chest

Chairman Tony Pidgley warned that group profits had now reached the high water mark, predicting reported profit next year would be 30% down as the London market suffered a slowdown.

Announcing 2017 results this morning, he said that Berkeley would now target a 20% pre-tax return on equity over the cycle, depending upon the level of cash, which currently includes around £400m excess due to macro uncertainty.

“With London starts around 30% lower than two years ago, it is telling that some funders and builders are choosing to exit the market when faced with the degree of risk and regulation that now confronts development in the capital where macro and political uncertainty, including Brexit, are leading to this caution,” he said.

“This is a great shame as London is a fantastic world-class city with unique attributes that will last long beyond the current hiatus which is only exacerbating the well documented under-supply.”

During 2017 Berkeley saw pre-tax profit jump 15% to £935m, although homes sales fell nearly 10% to 3,536 homes, while average selling price rose £715,000 (2017: £675,000), reflecting the mix of properties sold in the year.

Operating margin increased to 28.8% from 27.8% in the previous year.

He said Berkeley was growing its business in Birmingham through the new St Joseph brand and had broken ground on its first modular factory in Ebbsfleet, which, once operational, would help to deliver a significant portion of construction value through off-site assembly.

Berkeley has now returned £9.34 of £16.34 it pledged to return to shareholders by 30 September 2021

Latest news

Plans in for final phase of £1bn Chelsea Barracks scheme

Last phase includes 126 affordable homes, and separate sports and medical centres
1 hour ago

Joiners injured in temporary access platform collapse

Court hears how two workers plunged seven metres through unsafe platforms at hospital site
56 mins ago

Green light for £50m Portsmouth Uni sports centre

Sports hub is the first project in a £400m University upgrade plan
16 mins ago

Wates wins £161.5m Wembley resi blocks deal from Quintain

Latest deal is Wates largest ever award on a single site
3 days ago

Construction’s most considerate contractors win ultra site awards

Latest initiative rewards highest industry site standards and supply chain collaboration
1 hour ago

Boost your online presence – join the new Enquirer Directory

New site for suppliers and buyers will showcase their products, services and latest stories
2 months ago

Go-ahead for 37-storey Leeds student tower

Work to start before the end of this year on landmark student tower
3 days ago

Construction degrees come under fire from students

Students claim courses fail to prepare them for life in the industry
3 days ago

McAlpine to start £30m Manchester biomedical hub

Work to start in September on Citylabs 2.0 building project
4 days ago

Roofer in six metre plunge on to solid concrete floor

Court hears how worker suffered multiple fractures after plunge on refurbishment job
3 days ago

Cost of industry skills cards set to rise in September

CSCS leaders confirm 20% price rise per card to £36
4 days ago

£300m Bristol Uni campus approved

Work due to start on Temple Quarter Enterprise Campus early next year
3 days ago

Crossrail’s Sir Terry Morgan to lead HS2

Morgan replaces David Higgins as HS2 chairman next month
3 days ago

Shake-up in cladding fire tests to cut wait times

New testing service launched as current capacity swamped post-Grenfell
4 days ago

£25m A55 improvement scheme gets green light

Contractor to be named shortly for 2.2km stretch of the A55 at Abergwyngregyn
4 days ago

Galliford Try starts £43m central Birmingham resi job

Works starts on three blocks of luxury flats at Windmill Hill
4 days ago

Ex Carillion boss Howson blames Government for collapse

Former chief executive attacks public body payment practices
4 days ago

Winners named for £12bn Government FM framework

Forty seven firms including 10 SMEs bag public sector FM places
5 days ago

Buckingham Group hits record profits for fourth year

Business gears up for HS2 work and sport and leisure division expansion
4 days ago

Bid race for £50m new M11 Harlow junction

Junction and road improvements to allow further expansion of Harlow
4 days ago

Costain/Galliford Try to start £373m M1 upgrade next month

Firm to start delayed 23-mile smart motorway upgrade in Northamptonshire
4 days ago

Wates looking to work with new North West subcontractors

Wates Living Space and Constructionline hosting Manchester Meet the Buyer event: Register now
4 days ago

Gas fittings cost cutting put college students at risk

HSE probe finds cheaper fittings were used on Royal Veterinary College upgrade
4 days ago

Vinci confirmed for £75m Trafford Centre upgrade

Construction to start later this year on revamp on Manchester shopping centre
5 days ago

Skanska UK profits tumble as margin squeezed to 0.8%

Profit falls for second year running as revenue rises to £1.8bn
6 days ago

Green light for Cheesegrater 2 in City of London

56-storey skyscraper will be third tallest building in the Square Mile
6 days ago

Caledonian tops £300m ‘modular C’ schools framework

Partners revealed for ESFA secondary school replacement programme
5 days ago

Barratt ups annual completions by just 184 homes

Better than hoped central London sales help deliver record £835m profit
5 days ago

Interserve wins £15m Liverpool neonatal job

Work to start on 60-week contract in September
5 days ago

Plans in for £100m Liverpool marina resi scheme

More than 550 new waterfront homes planned at Brunswick Quay
5 days ago

Contractor services