Berkeley Group said today it was in line to meet performance expectations in spite of the continuing downturn in the housing market and a dip in sales levels.
‘Since the beginning of its current financial year, Berkeley has experienced sales levels approximately 50% below the historical average,’ the company said this morning in an interim management statement for the three months to 31 August.
‘This is a level that, with the benefit of the strong opening forward sales position, will enable the group to meet its strategic objectives. At the same time, Berkeley is confident of its ability to maintain operating margins within its historic range through a combination of efficiency measures and adding value to its sites through new planning consents.
‘As a result, the performance of the group is in line with the board's expectations for both the six months ending 31 October, the results for which will be announced on 5 December 2008, and the full year ending 30th April 2009.’
Increase in cash
Berkeley said that it had moved from a net debt position of £4.5m at the start of the year to a net cash position of £71m, and that this would allow it to snap up discounted land.
Berkeley shares rose 17p to 858p this morning. It has seen its share price fall 36% in the past year, outperforming its peers, because of its focus on regeneration-led schemes and relatively low gearing of 1%.
On the prospects for the market Berkeley said: ‘Looking forward, we welcome the government's initiatives in respect of first time buyers; however, the two critical factors required to provide the stimulus for the housing market to return to more normal levels of activity and release the undoubted underlying demand, are the return of liquidity to the mortgage market and the return of the feel-good factor, which is closely linked to the wider economy and, in particular, job security.’