- Sales market still ‘resilient’
- Full-year earnings seen above forecasts
- Cash return to exceed £282 million
Premium property developer Berkeley (BKG) surprised the market with the positive tone of its latest trading update and its forecast for earnings for the year to April 2023.
Its shares jumped 5% to £36.35 as investors digested the better than expected earnings guidance.
RESILIENT MARKET
Berkeley reported trading was firm between the end of April and the end of August this year, with the value of underlying sales ahead of the previous year.
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The ongoing resilience of the sales market meant Berkeley was able to push through price rises above the rate of cost inflation, which remains between 5% and 10% across the portfolio.
It added: ‘The good level of demand continues to support pricing above business plan levels, which is sufficient to cover cost increases on a blended basis across Berkeley’s developments.’
As a result, pre-tax profits for the year to April 2023 are seen rising to £600 million compared with a consensus forecast of £592 million according to S&P Market Intelligence with a slight weighting towards the second half.
Net cash is expected to remain at a similar level to the £269 million held at the end of April 2022.
CASH RETURNS
As announced in mid-August, Berkeley will pay a dividend of 21.25p per share at the end of this week, which will take the total return of cash up to the end of this month to £141.1 million as planned.
The firm is paying another £141.1 million out to shareholders by the end of March next year through a combination of buybacks and dividends, with £38.3 million already used for buybacks.
In other words, the scheduled annual return is £282.2 million or 259p per share.
