{"id":25392,"date":"2023-06-21T06:44:41","date_gmt":"2023-06-21T10:44:41","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/berkeley-shares-fall-2-following-trading-update-as-inflation-data-hits-housebuilders\/"},"modified":"2023-06-21T06:44:42","modified_gmt":"2023-06-21T10:44:42","slug":"berkeley-shares-fall-2-following-trading-update-as-inflation-data-hits-housebuilders","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=25392","title":{"rendered":"Berkeley Shares Fall 2% Following Trading Update As Inflation Data Hits Housebuilders"},"content":{"rendered":"
\n

Housebuilders led the FTSE 100 lower in Wednesday business following more shocking inflation data from the UK. London-focused builder Berkeley Group was one of the index\u2019s leading fallers despite the release of solid full-year financials.<\/p>\n

At \u00a338.30 per share Berkeley\u2019s share price was 2% lower in midweek business.<\/p>\n

The company said that revenues rose 8.6% during the 12 months to April to \u00a32.55 billion. Pre-tax profit meanwhile increased 9.5% year on year to \u00a3604 million, in line with guidance.<\/p>\n

Net cash increased to \u00a3410 million from \u00a3269 million over the period, with a \u00a3629 million decline in land-related spending boosting the balance sheet.<\/p>\n

Reflecting current market weakness, forward sales at Berkeley fell to \u00a32.1 billion as of April, down 15% year on year. And the business cautioned that sales in financial 2024 \u201c will be around 20% lower\u201d than last year based on current sales rates.<\/p>\n

But the company said that \u201csales pricing remains firm and above business plan levels with build cost inflation moderating.\u201d<\/p>\n

Interest Rate Headwinds<\/h2>\n

<\/fbs-ad><\/p>\n

Chief executive Rob Perrins said described last year\u2019s trading as \u201ca very strong performance… given market conditions and changing building regulations, and reflects the resilience of Berkeley’s business model with its focus on the country’s most undersupplied markets.\u201d<\/p>\n

He said that the business continues to witness \u201cgood levels of enquiry\u201d for its homes. But he added that \u201cthe market is likely to lack urgency until there is more certainty over the trajectory of interest rates.\u201d<\/p>\n

A flow of alarming inflation data is fuelling speculation that interest rates in the UK will remain higher for longer. Latest figures today showed consumer price inflation remain stubborn at 8.7% in May when a decline to 8.5% had been expected.<\/p>\n

The Bank of England is tipped to raise its borrowing rate by 0.25% when it next meets tomorrow. But bets are rising that policymakers will increase its benchmark by half a percentage point to 5% following today\u2019s inflation readings.<\/p>\n

Still, Berkeley today re-iterated its guidance of delivering pre-tax profits of \u201cat least\u201d \u00a31.05 billion over the next two fiscal years. It said that profits would be weighted towards the second half of this period.<\/p>\n

But the firm advised that it \u201cwill remain cautious in committing to new investment until the conditions for growth are in place.\u201d<\/p>\n

\u201cAn Omen\u201d<\/h2>\n

Adam Vettese, analyst at social investing firm eToro, says that Berkeley\u2019s latest update \u201ccould be an omen for the wider housing market and one of the last benign updates from a housebuilder for some time.\u201d<\/p>\n

He said that \u201cwe\u2019re now entering a very dangerous period for the housing market\u201d as mortgage rates rise, and noted that \u201cBerkeley is also heavily exposed to one of the most at-risk markets in London.\u201d<\/p>\n

However, Vettese added that \u201cwhile the housing market could be in for a rough ride for the next couple of years, the fundamentals haven\u2019t really change if you view it with a long-term lens,\u201d noting that the UK continues to fail to build enough homes.<\/p>\n

Andy Murphy, director at Edison Group, described Berkeley\u2019s update as \u201c<\/strong>a strong set of results.\u201d But he noted that the amount of cash it invested in new land holdings dropped to \u00a37.6 billion last year from \u00a38.3 billion previously.<\/p>\n

\u201cThis suggests that the Berkeley Group lacks confidence in the market, and prefers to keep cash-on-hand to weather future difficulties,\u201d Murphy said.<\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Housebuilders led the FTSE 100 lower in Wednesday business following more shocking inflation data from the UK. London-focused builder Berkeley Group was one of the index\u2019s leading fallers despite the release of solid full-year financials. At \u00a338.30 per share Berkeley\u2019s share price was 2% lower in midweek business. The company said that revenues rose 8.6% […]<\/p>\n","protected":false},"author":1,"featured_media":25393,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-25392","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-markets","tag-featured"],"yoast_head":"\nBerkeley Shares Fall 2% Following Trading Update As Inflation Data Hits Housebuilders | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Housebuilders led the FTSE 100 lower in Wednesday business following more shocking inflation data from the UK. 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