Berkeley Rises to Three-Month High as Profit Beats Estimates

Berkeley Group Holdings Plc (BKG), the U.K.’s largest homebuilder by market value, rose to the highest in more than three months in London trading after reporting profit that beat analysts’ estimates.

The shares advanced 3.2 percent. Net income increased 66 percent to 158.5 million pounds ($247 million) in the 12 months through April after the Cobham, England-based company sold more of its homes at higher prices, according to a statement today. Analysts expected a figure of about 156 million pounds, the average of three estimates compiled by Bloomberg.

“We are becoming more London-centric,” Managing Director Rob Perrins said in an interview today. “You can always sell in London; you want to be in international cities, you want to be in the prime areas.”

Homebuilding is failing to keep up with a growing number of households in the U.K., supporting values even as inflation, anemic wage increases and lending curbs have undermined buying power. Now is an “excellent time” to buy a home because the shortage will continue to push up prices, former Bank of England policy maker Charles Goodhart said in an interview yesterday.

Berkeley rose 44 pence to 1,409 pence at the 4:30 p.m. close of trading in London, raising the company’s market value to 1.85 billion pounds and overtaking Persimmon Plc (PSN) as the biggest U.K. homebuilder by that measure. The shares have added about 8.8 percent in the past 12 months.

Higher Prices

The company’s profit for fiscal 2012 was the biggest in six years. Home sales rose to 3,565 from 2,544 a year earlier, according to the statement. The average selling price increased 3 percent to 280,000 pounds. Revenue climbed 40 percent to 1.04 billion pounds.

The operating margin, excluding a 30.7 million-pound gain on the sale of a student accommodation asset, rose to 18.8 percent from 18.3 percent a year earlier.

“There is plenty to be positive about and in the short- term, the shares should go better,” Panmure Gordon & Co. analysts Mark Hughes and Rachael Applegate said in a note to investors today. The company has a hold rating on the stock.

An increase in the tax for homes sold for more than 2 million pounds will affect about 100 homes being built by Berkeley in the next three years, Perrins said. Chancellor George Osborne raised the levy, known as the stamp duty, to 7 percent from 5 percent in March.

“I’m disappointed with the government; I think they’re anti-growth,” Perrins said by telephone.

About 1,620 homes worth more than 2 million pounds were sold in England and Wales last year, according to the U.K. Land Registry. Luxury-home prices in central London rose the least in nine months in May after the British government increased property transaction tax.

Cash due on forward sales was 1.06 billion pounds for the year through April compared with 813.5 million pounds. Net debt was 57.9 million pounds compared with 42 million pounds a year earlier.

To contact the reporter on this story: Chris Spillane in London at cspillane3@bloomberg.net.

To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.net.

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