ii view: brownfield builder Berkeley Group looks long term

Full-year results to 30 April

• Revenue up 0.9% to £2.49 billion
• Pre-tax profit down 5.1% to £528.9 million
• Net cash of £337.3 million, down from £532 million
• Total shareholder returns of £381.5 million, up from the prior year’s £170.4 million 

Guidance:

• Continues to expect pre-tax profit of £450 million for the current financial year
• Now expects FY 2027 pre-tax profit of a similar level to 2026 based on current sales rates

Chief executive Rob Perrins said:

"With over 75% of sales secured for the coming year, we are well-placed to achieve our FY26 pre-tax profit guidance of £450 million. This represents an excellent operational performance with highly disciplined execution and close control of costs. 

"We have added long-term value to the business, both in our land holdings and through our Build to Rent (BTR) platform, while returning £381.5 million to shareholders; a great start to the Berkeley 2035 strategy.”

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ii round-up:

Berkeley Group Holdings (The) (LSE:BKG) was established in 1976 with the housebuilder today operating principally in London, Birmingham and the Southeast. 

Group brands include Berkeley Homes, St Edward, St George, St James, St Joseph and St William. 

Management previously outlined plans to establish a Build To Rent (BTR) platform, with 4,000 of its builds over the next 10 years being kept by itself and rented to tenants.

For a round-up of these latest results announced on 20 June, please click here.

ii view:

Berkeley Group describes itself as the only large UK homebuilder focused on the regeneration and reviving of disused and underused land to build mixed-use neighbourhoods within the UK's most undersupplied markets. Group competitors include Barratt Redrow (LSE:BTRW), Taylor Wimpey (LSE:TW.) and Persimmon (LSE:PSN).

Berkeley’s new 10-year strategic plan hopes to offer increased financial flexibility in allocating an expected £7 billion in free cashflow between land investment, growing the BTR platform and shareholder returns.

For investors, management’s prediction for full year 2026 and 2027 profits of around £450 million, down from 2025’s £528 million, points to steady if not near-term grow. Economic outlook uncertainties arguably now include concerns about UK government debt and interest rates following policy U-turns. Changes to building safety regulations may increase costs and lengthen build times, while the group’s relatively new strategic plan could potentially see shareholder returns lowered in favour of investment in BTR or new land.

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On the upside, the value of private 2025 sales reservations improved 5% over 2024. Berkeley remains encouraged by the UK government’s push to lighten planning regulations. The group’s BTR platform is being delivered under flexible terms with sales of the properties also possible, while a share price-to-net asset value below the three-year average points towards potential value. 

In all, ongoing economic outlook uncertainty and expected flat profits from 2026 to 2027 offer grounds for caution. That said, Berkeley has an enviable track record of navigating difficult market conditions and offers a forecast dividend yield of over 4.5%.

Positives: 

• An industry revered track record
• Enjoys interest from overseas customers

Negatives:

• Uncertain economic outlook
• Planning reforms have in the past failed

The average rating of stock market analysts:

Strong hold