BUSINESS LIVE: Berkeley’s housing market woes; CMA backs aviation watchdog; TRG chair to step down

Berkeley Group has upheld annual profit guidance despite the value of home reservations plummeting in recent months.

The blue-chip listed housebuilder anticipates earning at least £1.05billion in pre-tax profits for this year and the next, compared to £604million for the 12 months ending April 2023.

Berkeley told investors on Friday that weaker trading conditions had been offset slightly by a solid opening forward sales position, with more than 90 per cent of turnover for the 2024 financial year exchanged.

More than 2.8million Britons may have been forced to sell their cars to cope with cost-of-living crisis pressures, a study has claimed.

According to a new survey from Motorway, 11 per cent of Britons may have been forced to sell their motors because of spiralling energy, rent, food and, car costs such as MOTs and petrol.

Standard Life has launched an annuity deal following a strong recovery in the retirement income they can buy, which has tempted many older savers to give them another look.

This would offer a 65 year old with a £100,000 pension pot living in a medium band postcode around £7,000 a year, with no guarantee period after purchase or inflation protection.

Storm clouds are gathering over the global economy amid mounting fears over China and Europe – and in particular Germany.

Official figures published in Beijing yesterday showed exports from China – often seen as the workshop of the world – were 8.8 per cent lower in August than in the same month last year.

A London-listed special purpose acquisition company has moved closer to launching a vehicle designed to give investors access to the Lloyd’s of London insurance market.

Financial Acquisitions Corp said this morning it had established London Innovation Underwriters Limited (LIU), as part of a plan to deploy funds in the historic insurance market and build a reinsurance book with up to £1billion of capacity.

The SPAC intends to combine with LIU and raise a ‘significant sum’ of equity capital on the London Stock Exchange, the statement said, adding a further statement would be made once the combination was entered into.

Aarin Chiekrie, equity analyst at Hargreaves Lansdown:

‘It looks like the recent interest rate hikes pushing up mortgage costs are causing a relative lack of urgency among new buyers as private sales reservations dropped 35 per cent.

‘Pricing’s remained resilient though, due to the constrained supply of new-build and second-hand homes, giving Berkeley the confidence to reiterate its guidance for £1.05billion of pre-tax profits across the coming two financial years, weighted slightly towards the current year. That represents declines of around 10 per cent in consecutive years.

‘In the meantime, Berkeley’s taking action to protect its financial resilience by carefully matching its supply with demand and completely stopping spending on new plots of land. That’s expected to keep net cash at £325million by the end of October, down around 20 per cent since April but should be enough to help cushion the impact of lower sales in the near term.

‘Looking bigger picture, Berkeley’s London focus offers something different to peers, and demand in the capital’s likely to remain more robust than other areas of the country.

‘Add to the mix that the UK housing market’s suffering from a fundamental supply shortage, and the long-term picture doesn’t look so bleak. But in the short term, there’s plenty of stormy clouds for Berkeley to weather.’

London-listed stocks are trading higher thi smorning as easing US bond yields and crude prices offer investors some relief at the end of a rough week for global markets.

Global stock markets have come under pressure this week as a surge in oil prices raised concerns about persistent price pressures and US economic data fed into worries that interest rates will remain higher for longer even as data from elsewhere in the world disappointed.

Oil prices have dipped about 0.5 per cent so far today and US yields have retreated.

Berkeley Group shares are down 0.1 per cent after the house-builder joined sector peers in highlighting a gloomy trading environment in the face of rising interest rates and wider macro economic concerns.

The London stock market was dealt a fresh blow as Smurfit Kappa announced plans to merge with an American rival.

The FTSE 100 packaging giant, which has its headquarters in Dublin, is in ‘advanced talks’ with Georgia-based WestRock about a mega-deal worth £15billion.

Alchemy Copyrights has agreed to buy music copyright-focused investment firm Round Hill Music Royalty Fund for about $468.8million,giving it access to songs including Backstreet Boys’ ‘I Want It That Way’.

Shareholders in Round Hill Music will get $1.15 in cash per scheme share, representing a premium of about 67 per cent to the stock’s closing price on Thursday.

Alchemy Copyrights, trading as Concord, is an acquirer of music rights and companies, with transactions spanning recorded music, music publishing and theatricals.

Round Hill Music’s portfolio of music rights comprises 51 catalogues with a collection of more than 150,000 songs, including the Beatles’ ‘She Loves You’.

Shares in the UK’s leading listed vet firms plunged after regulators launched a probe into prices.

The Competition and Markets Authority is investigating whether the cost of vet services is fair following concerns that price rises are outpacing inflation.

Shares in Pets at Home closed down more than 9 per cent at 343.2p, wiping £169million off its market capitalisation.

Wagamama owner Restaurant Group’s Chairman Ken Hanna will step down after months of pressure from activist investors to change its management and improve profitability.

Hanna, who took over as the group’s chairman at the start of January 2022, will remain its chair until a successor is appointed.

He had also held the role of chairman at car dealer Inchcape and equipment rental firm Aggreko.

The Restaurant Group management has come under fire from activist shareholders Oasis Management and Irenic Capital Management seeking changes at the company, whose shares lost two-thirds of their value last year.

Melrose boss Simon Peckham boasted his controversial takeover of GKN helped create a British ‘aerospace champion’ – as he announced plans to step down.

Peckham said buying the historic manufacturer for £8billion five years ago has revitalised a ‘fading UK industrial icon’.

However, he did not rule out the business being sold, raising the prospect of a foreign takeover.

Britain’s competition regulator has said it provisionally backs the Civil Avivation Authority in most of its decisions over how much Heathrow Airport can charge airlines over the 2024-2026 period, after both airlines and the airport launched appeals.

The Competitions and Markets Authority, the CMA, stepped in to review the CAA’s decision after the cut to charges it proposed for the next three years angered both sides.

Britain’s Heathrow said lower fees would hit investment, while the airlines, British Airways and Virgin Atlantic, said the cuts did not go far enough.

The CMA now has until 17 October to decide whether to allow or dismiss the appeals, it said in its statement on Friday.

;Overall we provisionally consider that the CAA was not wrong in most of the decisions that were appealed to us,’ the CMA said.

A crackdown on cryptocurrency has been delayed.

The Financial Conduct Authority said stricter regulation about marketing crypto would come into force next month but firms can apply for more time to comply with rules, such as a 24-hour cooling-off period.

It said companies could be given until January 8. The rules were due to take effect from 8 October.

Berkeley Group has joined sector peers in highlighting a gloomy trading environment in the face of rising interest rates and wider macro economic concerns, but the high-end housebuilder has maintained its profit guidance.

The FTSE 100 builder reported a 35 per cent slump in underlying private sales reservations in the first four months of its current fiscal year beginning 1 May.