Winter of content for builder Berkeley

Housebuilder Berkeley said a 25 per cent jump in sales reservations over the winter had boosted its confidence in results for this year and next.

The group, which focuses on London and the Home Counties, expects earnings for the year to the end of April to be at the high end of forecasts, with further growth in the next financial year should trading conditions stay the same.

The update prompted broker Numis to upgrade its profits estimate for 2012 by 14 per cent to £160m and said earnings were on track to double between 2010 and 2014, rather than its previous forecast of a five-year time frame.

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Berkeley’s sales benefited from an increase in its number of outlets as the average number of visitors per site so far this year has been flat on a year earlier due to current restrictions on mortgage availability. Cancellation rates are at historically low levels, it added.

Forward sales currently exceed £800m, equivalent to around one year of future revenues according to Numis. And build costs remain benign with underlying increases in fuel and commodities offset by spare capacity in the construction sector, Berkeley added.

The group, which carries out 95 per cent of its developments on brownfield land, has acquired a further 1,000 plots across eight new sites, bringing total number of plots acquired in the year to 3,500 homes across 21 sites.

Chris Millington, analyst at Numis Securities, said: “In our view this is a solid update and with profits rising significantly faster than our forecasts it is likely that profits could double on a three to four-year view.”