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Berkeley holds guidance on better-than-expected trading
4th Sep 2020 07:01
(Sharecast News) - House builder Berkeley maintained full year guidance as it reported better-than-expected production levels due to pent-up demand after the easing of coronavirus lockdown measures.
The company on Friday said it anticipated a more even split of profit between the first and second halves of the year and held its existing £500m pre-tax profit forecast and commitment to return £280m a year to shareholders.
However, Berkeley also sounded a note of caution over current volatility and risks from the longer term economic impact of Covid-19, including once current government support tapers and the possibility of a severe second wave of the virus.
"We are also conscious of the risks around the UK's departure from the European Union at the end of 2020," it added.
The company said trading had been driven by the demand for properties in under-supplied markets, good mortgage availability and government's temporary removal of stamp duty for the first £500,000 of sales value and the announcement of a brief extension to the current 'help to buy scheme'.
Underlying sales reservation values for the first four months of the new fiscal year were around 20% below the annualised run rate for 2019, which was supportive of forward sales remaining around the year-end position of above £1.8bn.
Berkeley currently has more than £1bn in net cash, and would return £134.3m of this to shareholders as a dividend of 107p a share next week. A further £140.1m would be returned to shareholders by the end of March 2021 through dividends and share buybacks.
Hargreaves Lansdown analyst William Ryder said the Berkeley's confident forecasts would cheer investors.
"Berkeley offers something a bit different to the other housebuilders, which is reflected in management's confidence and the group's valuation. Assuming we can avoid further disruption or a sustained recession the group looks well placed going forwards," he said.
AJ Bell investment director Russ Mould said the developer's net cash position "provides support for a long fallow period and enables the payment of dividends to reward shareholders' patience, something not replicated by all of its peer group".
The company on Friday said it anticipated a more even split of profit between the first and second halves of the year and held its existing £500m pre-tax profit forecast and commitment to return £280m a year to shareholders.
However, Berkeley also sounded a note of caution over current volatility and risks from the longer term economic impact of Covid-19, including once current government support tapers and the possibility of a severe second wave of the virus.
"We are also conscious of the risks around the UK's departure from the European Union at the end of 2020," it added.
The company said trading had been driven by the demand for properties in under-supplied markets, good mortgage availability and government's temporary removal of stamp duty for the first £500,000 of sales value and the announcement of a brief extension to the current 'help to buy scheme'.
Underlying sales reservation values for the first four months of the new fiscal year were around 20% below the annualised run rate for 2019, which was supportive of forward sales remaining around the year-end position of above £1.8bn.
Berkeley currently has more than £1bn in net cash, and would return £134.3m of this to shareholders as a dividend of 107p a share next week. A further £140.1m would be returned to shareholders by the end of March 2021 through dividends and share buybacks.
Hargreaves Lansdown analyst William Ryder said the Berkeley's confident forecasts would cheer investors.
"Berkeley offers something a bit different to the other housebuilders, which is reflected in management's confidence and the group's valuation. Assuming we can avoid further disruption or a sustained recession the group looks well placed going forwards," he said.
AJ Bell investment director Russ Mould said the developer's net cash position "provides support for a long fallow period and enables the payment of dividends to reward shareholders' patience, something not replicated by all of its peer group".