Berkeley still strong despite property slump

The data from companies reporting in the last quarter showed that Berkeley had an operating margin of 20% over the past six months, compared with a sector average of 13.1%.

Richard Kelly, construction partner at BDO, said: “Berkeley is holding up so much better than the rest. It’s operating in a different league, in that it’s a longer-term developer, but not so different that it can’t be compared to its rivals.”

Although Berkeley posted strong results for the year ended 30 April 2008, it was guarded about the outlook.

Pre-tax profit was up 3%, from £188.1m to £194.3m, and turnover rose 8% from £918.4m to £991.5m.

Tony Pidgley, Berkeley’s chief executive, conceded the market was “challenging” and “uncertain” but had little more to say about the firm’s trading prospects for the rest of 2008. Despite the vagueness, the City reacted positively to the results and Berkeley’s net debt level of £4.5m.

Kevin Cammack, an analyst with Kaupthing, said the City had always reacted as much to what Pidgley said as it had to the performance of the company.

It’s bad out there and getting worse. There’s no sign of liquidity returning yet and no light at the end of the tunnel.

Richard Kelly, BDO stoy hayward

Berkeley also announced a plan to defer a return of 300p to shareholders. Instead, it will plough the cash into land buying at a time when rivals are less able to spend.

Cammack added: “If approved – and it should be – this plan will once again demonstrate Berkeley's innovation and ability to play the cycles with superior strength and guile.”

Elsewhere in the BDO survey, Miller Group posted a margin of 11.5%. BDO’s Kelly said: “It’s never been a spectacular performer in terms of margin so it wasn’t a big shock.”

Telford Homes recorded a margin of 16.6%.

Kelly said: “It’s bad out there and getting worse. There’s no sign of liquidity returning yet and no light at the end of the tunnel.”

He said the picture would become clearer in the next few months after Barratt, Taylor Wimpey, Persimmon and Redrow posted their annual results.”