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Berkeley Group raises guidance despite drop in profits amid housing market slowdown

High-end housebuilder Berkeley Group raised its full-year profit guidance Friday despite reporting first-half profit fell by more than quarter amid a slowdown in the London and Southeast housing market.

Berkeley increased its pre-tax profit guidance for the current year by at least 5% and now anticipated a similar split between the first and second half to last year when 55% was earned in the first six months of the year, the company said.

For the six months ended 31 October, pre-tax profit fell 25.7% to £401.2m and revenue declined by 0.7% to £1.65bn.

The company sold 2,027 homes, down from 2,190 a year earlier, at an average selling price of £740,000, up from £721,000 a year earlier.

Guidance for next two years unchanged with pre-tax return on earnings expected to normalise thereafter towards 15%, based on current market conditions, the company said.

The homebuilder said its short-remained uncertain due to the ongoing Brexit process and a number of headwinds in the operating environment in London and the South East. 'This uncertainty affects sentiment and confidence which has a consequential adverse impact on investment levels and transaction volumes with a number of developers withdrawing from these markets,' it added. Story provided by