Berkeley bullish about market bounce back

Grant Prior 1 year ago

Berkeley is confident of regularly hitting annual pre-tax profits of £500m as the house builder predicts a strong bounce back from the Covid-19 pandemic.

The firm unveiled latest results for the year to April 30 today showing pre-tax profits of £503.7m from turnover of £1,920.4m.

Berkeley had predicted profits of £550m before revising that target down to £475m when lockdown hit.

It said: “Berkeley therefore surpassed its initial expectation in this regard, in spite of the challenges of maintaining production on site and for customers in securing mortgages and achieving legal completions in this period.”

Berkeley sites are currently working at around 80% of full capacity.

Chief executive Rob Perrins said: “Looking forward, this response to the initial impact of Covid-19 means that the Company is still targeting a cumulative pre-tax ROE of 15% for the six year period ending on 30 April 2025, which broadly equates to average annual pre-tax profit of £500 million.

“We now anticipate profit delivery in the coming year to be weighted towards the second half of the year in an approximate one third to two thirds ratio.

“This does assume no further significant disruption from a second wave of Covid-19 or a disorderly end to the Brexit transition period.”

Berkeley currently has £1,138.9m of cash in the bank and estimated gross profit in its land holdings of £6.4 billion.

Perrins said: “Over the last two years construction has begun on over 20 new sites giving Berkeley a firm foundation for delivering, prior to Covid-19, an anticipated 50% increase in production over the next five years, underpinned by a strong opening forward sales position. 

“While Covid-19 has caused short term delays and volatility, it does not change the fundamental strength of the business, which is set up in appreciation of the risks of a cyclical market.

“Berkeley’s financial strength means that it can continue to meet its purpose by investing in its unique operating model to deliver large, complex regeneration sites and help the country rebound from the impact of the pandemic and to continue supporting approximately 32,000 UK jobs, directly and indirectly, in its business and supply chain for the foreseeable future.”

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