London-focused housebuilder Berkeley (BKG) gains 8.6% to £41.77 and gives its housebuilding peers an early Christmas present in share price terms as it raises its profit guidance for the coming years.

After building more homes than expected in its first half running to 31 October, the company says it will generate pre-tax profit of £3.3bn in the five years out to 2021, up from £3bn.

Of this, £1.5bn will be delivered in the two years to 30 April 2019, approximately 60% weighted towards the current year.

This weighting reflects guidance from the company that its current financial year will represent a peak for the group, warning of the impact of Brexit uncertainty and high property taxes on its customers.

Berkeley has benefited from its investment when land was cheap during the financial crisis and this helps explain why its current returns are so impressive.

However, the strength in the share price may prove shortlived as market focus switches from the upgrades implied by today’s statement to the more muted medium-term outlook.


Issue Date: 08 Dec 2017