Berkeley profits slide but eyes stability

26th Jun 2009 07:12

Profits tumbled last year at Berkeley but the London and South East -focused housebuilder reports some stability returning to the market in the last three months. Pre-tax profit for the year to April fell to £120.4m from £194m on revenues of £702m, down 29% from the previous year's £992m. Operating margins were 17.8%, but Berkeley took no land value write downs. "In spite of the harsh trading environment, in which the value of underlying sales reservations was 52% below the historic average, Berkeley ended the year with net cash of £284.8m as a result of strong cash generation from the business and the £49.6m net proceeds from the share placing completed in March 2009," managing director, Tony Pidgley said. "The last quarter has seen an improvement in transaction levels and sales prices have stabilised. Since the peak of the market in 2007, sales prices have fallen approximately 20%, although this varies according to location," he added.Looking forward, the trading outlook remains uncertain, but assuming transaction levels do not fall further, Berkeley is confident of being able to maintain operating margins at the lower end of the historic range, the statement said. Berkeley's land bank remains over 30,000 plots and contains in excess of £2bn of future gross margin.