24 C
New York
Tuesday, July 5, 2022

Buy now

Berkeley – Profits Forecast To Keep Growing Despite Several Headwinds

By Anna Peel. Originally published at ValueWalk.

Berkeley ABF Ashtead Asana FTSE 100 Rate Hike Stock Market Metaverse equity markets Johnson Matthey Close Brothers Target vodafone General Motors Earnings Emotion Sectors Barclays Dividend Meta Stock Markets Overvaluation Most Bought And Sold Securities Farnam Street easyJet Equity Income Funds NEXT Shares ISA Markets Rally Russia Pharmaceutical Stocks Diversification Stocks NASDAQ:SFM TJX Companies FANGAM Ten Worst Performing IPOs Of 2021 Mega Tech Stock Market Tideway HomeToGo Buy The Dip stocks Taylor Wimpey Index Funds Sorfis Investments Negatives To Stocks 10 best performing mega cap stocks in 2021

Berkeley Group Holdings PLC (LON:BKG) posted revenue of £2.3bn, up 6.6%, as the group sold 33% more homes. Higher operating costs and a lower average selling price, due to the type of property sold, meant operating margin declined 1.2 percentage points. However, driven by higher profit from joint ventures, pre-tax profit rose 6.4% to £551.5m.

Pre-tax profit is expected to come in at £600m next year, and £625m for the two years thereafter.

Berkeley continues to target £282m in shareholder returns per year, in either dividends or buybacks. £63.7m has been returned so far this year, with more information on the dividend coming on 11 August.

Q1 2022 hedge fund letters, conferences and more

The group warned on volatility in the housing market, but sees prices continuing to offset cost inflation.

The shares were broadly flat following the announcement.

Matt Britzman, Equity Analyst at Hargreaves Lansdown

“Berkeley’s results showed that despite higher build costs, rising interest rates, and a cost-of-living crisis, buyers seem somewhat undeterred from splashing out on new homes. Sales up 6.4% reflects a decent jump in the number of homes sold. The average selling price came down, but the result is revenue rising enough to offset higher build costs. The London focus and higher value homes mean the target audience is arguably more sheltered from the cost-of-living crisis than others and forward reservation and sales both look to be steady. That’s led management to forecast an extra c.£50m in pre-tax profit to come through next year.

Berkeley will be acutely aware though that buyers’ appetite can quickly shift, and that’s likely to be a driving force behind the big land buying spree we’ve seen this year as the group pushes to take full advantage of current conditions.”

About Hargreaves Lansdown

Over 1.7 million clients trust us with £132.3 billion (as at 30 April 2022), making us the UK’s number one platform for private investors. More than 98% of client activity is done through our digital channels and over 600,000 access our mobile app each month.

Updated on

Sign up for ValueWalk’s free newsletter here.

Notify of
Inline Feedbacks
View all comments

Stay Connected


Latest Articles

Would love your thoughts, please comment.x