Proactive Investors - Stepping aside from inflation for a moment, and house builder Berkeley (LON:BKGH) said it is well placed to serve its stakeholders despite ongoing volatility as it posted an increase in full-year profits.
The FTSE 100 firm said pre-tax profits in the year to 30 April jumped by 9.5% to £604mln, while earnings per share also grew by 2.1% to 426.8p.
“This is a very strong performance by our sales and construction teams, 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,” said chief executive Rob Perrins.
Berkeley was also confident in reiterating guidance, expected to deliver at least £1.05bn in profit over the next two financial years.
Pricing for sales also remains firm, with build cost inflation beginning to moderate, it said, although the near-term outlook for the market remains “uncertain.”
Berkeley has forward sales at a “healthy” £2.1bn, although the value of reservations is around 15% lower than the comparative financial year.
“Looking forward, we are well placed to meet our guidance for the next two financial years and continue investing in our existing regeneration sites, but will remain cautious in committing to new investment until the conditions for growth are in place,” Perrins added.
More on inflation
More on the UK’s surprise inflation figures, which came in above expectations of 8.4% and significantly higher than the Bank of England’s target of 2%.
Pressure will now be on policymakers to further raise interest rates to tame sticky inflation, with the BoE decision taking place tomorrow.
Interest rates are currently at 4.5%, although it is forecasted the bank will raise it by 25bps to 4.75%.
“There’s no way to sugar coat this, 8.7% is a bad number,” said George Lagarias, chief economist of audit and accounting firm Mazars.
“This number will compel policymakers, the Government and the Bank of England, to further clamp down on consumption, in order to break the wage-price spiral.”
“We expect that growth will further decelerate, possibly even pushing the economy past the recession threshold, even as early as the Autumn.”