Berkeley Group Holdings, one of the leading house builders in the U.K., has announced an extension of its guidance by an additional year. Despite selling fewer houses, the company reported a rise in pretax profit for the first half-year, thanks to higher average prices.
Updated Profit Expectations
The new guidance states that Berkeley Group Holdings anticipates delivering a minimum pretax profit of £1.5 billion ($1.89 billion) over the three years ending April 30, 2026. This is an increase compared to the previous guidance of £1.05 billion for the two years ending April 2025.
Consistent Operating Margins
The company expects its operating margins to remain within the long-term historical range of 17.5% to 19% over the next three years. In the half year ended October 31, margins were maintained at 19.5%.
Commitment to Shareholders
Berkeley Group Holdings reaffirmed its commitment to shareholders by pledging to pay £283 million, equivalent to £2.67 per share, by September 30, 2024. During the period, the company has already returned £127.6 million to shareholders, with more than half in share buybacks and the rest in dividends.
Rise in Half-Year Pretax Profit
Pretax profit for the first half-year rose to £298.0 million from £284.8 million in the same period last year.
Revenue and Net Asset Value
Although revenue slipped slightly to £1.19 billion from £1.20 billion, the net asset value per share, an important industry metric, increased to £32.19 from £31.01 on April 30.
Decreased Home Deliveries and Reservation Levels
Berkeley Group Holdings delivered 1,785 new homes during the period, with an average price of £624,000. This is a decrease compared to the previous year's 2,080 homes at an average price of £560,000. The change reflects the mix of properties sold during this period.
The company also noted that net reservations were approximately a third below the average over the period. This decline can be attributed to macroeconomic volatility and the expectation of higher interest rates in the foreseeable future.
Sales Outlook and Forward Sales
Berkeley Group Holdings anticipates that sales will remain subdued until there is greater confidence in falling interest rates and economic stability. The company expects sales to eventually return to a normal cyclical level.
Furthermore, the company reported a total of £1.96 billion in forward sales, which is slightly lower than the £2.14 billion recorded at the end of fiscal 2023.
Overall, Berkeley Group Holdings remains optimistic about its future performance and is committed to delivering positive results for its stakeholders.
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