Yahoo Finance Berkeley increases profit guidance although boss warns of slowing London sales
The chief executive of Berkeley Group has warned of slowing house sales in London and said the company has been more cautious in buying land in recent months.
Shares in the housebuilder soared more than 9pc on Friday morning after it upped its long-term profit guidance, despite warnings its financial performance would peak this year.
The FTSE 100 firm said it expects to generate £3.3bn in pre-tax profits between 2016 and 2021, up from previous estimates of £3bn. Profits soared 36pc to £533m in the six months to October, while revenues climbed 14pc to £1.6bn.
The firm expects to generate £1.5bn of profits in the two years to April 2019, with 60pc of that coming this year.
But Rob Perrins, the company's chief executive, said the London-focused housebuilder was exercising caution.
"Our big concern is that transaction levels in London have fallen 18pc," he said, blaming changes to stamp duty and tightening tax rules on mortgage interest as factors in the fall.
The company's land holdings edged lower, with 32,916 plots on the balance sheet in October compared to 33,771 in April 2017. "We have been more cautious because of the macroeconomic environment," Mr Perrins said.
He said he thought London mayor Sadiq Khan's target of building 60,000 homes in the capital "is possible", although simplifying the planning system would help.
"We've got to have the land as well," he added, "and one thing they won't touch is the green belt and I just don't think enough land will be available."
Chairman and founder Tony Pidgley said Friday's results were testament to the Berkeley’s “disciplined execution”.
He said: “While the political context for housebuilding is turbulent, where there is stability, the potential for growth and delivery remains strong.” Berkeley sold 2,117 homes in the period at an average price of £719,000.
Berkeley Group shares were up 9.28pc to £42.03 at the time of publication.
