Berkeley warns of a 20% hit to sales this year: here’s why

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Written on Jun 21, 2023

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Berkeley says higher rates and a difficult regulatory backdrop will hit sales.
It reported a 10% annualised growth in pre-tax profit for fiscal 2023 today.
Berkeley stock is trading at roughly the same price at which it started the year.

Berkeley Group Holdings PLC (LON: BKG) ended slightly down on Wednesday even though it reported a healthy annualised growth in pre-tax profit for the fiscal 2023.

Shareholders are concerned because the management warned of a 20% hit to sales this year as higher rates (find out more) and a rather difficult regulatory backdrop continues to restrict investment into homebuilding.

If housing delivery is to be maintained, planning system needs to respond to these challenges and certainty is needed in the regulatory environment as a matter of immediate priority.

Nonetheless, the high-end property developer reiterated its guidance for £1.05 billion ($1.34 billion) of profit in fiscal 2024 and 2025.

Berkeley also said today that it remains committed to returning £283 million a year to shareholders through September 2025.

Berkeley reports a 10% increase in full-year profit

For its fiscal 2023 that ended on April 30^th, Berkeley Group Holdings PLC reported £604 million of profit before tax – up 10% versus a year ago and beating consensus by some £6.5 million.

Including joint ventures, the London-listed firm delivered 4,637 homes in its recent financial year; roughly the same versus a year ago. Its revenue, though, climbed from £2.35 billion to £2.55 billion. In a press release today, CEO Rob Perrins said:

We’re well placed to continue investing in our existing regeneration sites, but will remain cautious in committing to new investment until the conditions for growth are in place.

Other notable figures in its full-year results include a 2.8% increase in net asset value per share to £31.01. Wall Street has a consensus “overweight” rating on the U.K. stock that’s currently trading at roughly the same price at which it started 2023.