Shares of Berkeley Group Holdings plc (BKG.L,BKGFY, BKGFF) were declining around 14 percent in the London trading after the property developer and house-builder Wednesday updated its strategy, suspending new land purchases and reducing investments. Further, the firm maintained profit view for fiscal 2026, and issued outlook for the next four years.
Berkeley's strategic update reflects the current operating environment and implications for the delivery of Berkeley 2035. Berkeley said it is re-phasing the delivery of its strategy over the next four years, due to the prolonged challenging market backdrop and geopolitical volatility.
The company now said it is not proposing to acquire new land while these conditions prevail, except through joint venture arrangements, and will focus on its existing land holdings.
With the ongoing conflict and deterioration of the economic outlook, the company also said it is reducing work in progress investment to match the current sales levels.
The company announced decisive action to maximise value by prioritising value creation from existing land holdings, tightly sequencing construction, flexing the pace of BTR investment and maintaining disciplined capital allocation while continuing shareholder returns.
Berkeley said, "In the first two months of 2026, we had begun to see signs of a modest recovery in sales volumes. However, we indicated in our Trading Update, that recent geopolitical events and the macroeconomic consequences, including reduced potential for further rate cuts, could reduce confidence in a near-term market recovery. This has now become a reality."
In its trading update for the full year results, Berkeley said it continues to expect pre-tax profit for fiscal 2026 of 450 million pounds, in line with guidance put in place two years ago, with around 300 million pounds of net cash.
Further, the company anticipates delivering above 1.4 billion pounds of pre-tax profit over the next four years from fiscal 2027 to fiscal 2030. The profile of profit before tax will likely be slightly weighted towards 2027 and thereafter broadly evenly spread.
The company said it has made good progress in the last 12 months in its target under Berkeley 2035 to add 2 billion pounds of value to its land holdings.
Construction phasing will continue to be matched to market demand and the pace of Building Safety Regulator approvals.
Berkeley will also target operating margin within its historic range of 17.5 percent to 19.5 percent. This requires both the maintenance of development margins and further real reductions in operating costs.
The company also targets to achieve a return on capital employed in the core business of at least 15 percent as soon as possible, and between 11 percent and 15 percent in the intervening years.
In London, the shares were trading at 2,940.00 pence, down 14.44 percent.
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