Berkeley says profit on track to match year before

Berkeley Group said it was on track for annual profit similar to the year before after "robust" trading but it was cautious about putting new developments on the market.

The statement puts the housebuilder in line to broadly match the £504m of pretax profit achieved in its last financial year.

Berkeley said forward sales are expected to be more than £1.7bn at the end of the year on 30 April putting it in a strong position to start the next financial year. The FTSE 100 group said it expected a similar level of profitability next year, underpinning its commitment to return £280m to shareholders each year.

Berkeley, which focuses on London and South East England, said market basics were strong with low interest rates and a shortage of homes in its main markets. Sales reservations and enquiries have been solid but the value of reservations for the current year will be down about 20% after Berkeley delayed the launch of new developments into the market until the economy opens up.

"Since the half year, Berkeley has continued to trade robustly," the company said. "Berkeley remains on track to deliver, in line with guidance, a similar profit to last year."

Berkeley shares fell 6.1% to £42.92 at 10:45 GMT and were the biggest fallers in the FTSE 100 partly because of concerns about its cautious marketing of developments when rivals are taking advantage of short-term momentum in the market.

"Of all the housebuilders Berkeley seems the least bullish," Russ Mould, investment director at AJ Bell, said. "It is phasing developments to coincide with a reopening of the economy. This may look very clever in time if it sees Berkeley deliver a smoother flow of profit and cash flow than its peers, many of which seem to be operating at 100 miles an hour.

"On the flipside Berkeley could miss out on some of the demand created by the current stamp duty holiday which is due to end in September."

The estimated future gross margin in the land bank is expected to be more than last year's £6.4bn and net cash will be around the £954m reported at the half year subject to investment levels and timing, Berkeley said.