Berkeley Targets Growth As Full-Year Earnings Falls

25th Jun 2010 07:30

By Anita Likus Of DOW JONES NEWSWIRES LONDON (Dow Jones)--U.K. home builder Berkeley Group PLC (BKG.LN) Friday posted declines in profit and revenue but said it plans to grow its earnings per share and its land bank by 10% over the next 12 months. "The demanding nature of this challenge should not be underestimated in these severely testing times but Berkeley is committed to ensuring the group remains at the vanguard of the industry and is the home builder of choice for all of its stakeholders," the company said in a statement. The company didn't declare a dividend because it believes that greater value will be achieved through land acquisition, investing in work in progress and opportunistic share purchases. "This dividend policy will, however, be reviewed at the end of each reporting period," said Chairman Tony Pidgley. Revenue for the year ended April 30 fell to GBP615.3 million from GBP702.2 million despite completions increasing from 1,501 to 2,201. As the mix of properties shifted to more lower-value units, as anticipated, average sales prices fell to GBP263,000 from GBP395,000 and drove revenue down. As a result, pretax profit fell 8.4% to GBP110.3 million from GBP120.4 million a year ago. Operating margin slipped to 17.3% from 17.8%. U.K. house builders have endured almost two years of turbulent market conditions as mortgage liquidity evaporated, crimping demand for new homes. But Berkeley was in a better position than rivals because it didn't have to take write downs, as it bought its land cheaply in the last downturn, and has a strong balance sheet. Berkeley generated GBP57.5 million of net cash, part of which was used to buy shares and settle share plans. Total net cash jumped to GBP316.9 million from GBP284.8 million and will be used to buy land. During the year, it bought 2,200 plots across 20 sites in its operating area of London and the southeast where underlying demand is strong. Berkeley shares closed Thursday at 800 pence. -By Anita Likus, Dow Jones Newswires; +44 20 7842 9407; [email protected] (END) Dow Jones Newswires June 25, 2010 02:30 ET (06:30 GMT)