Housebuilder Berkeley signals confidence with early dividend

LONDON Fri Dec 7, 2012 9:35am GMT

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LONDON (Reuters) - British housebuilder Berkeley Group (BKGH.L) declared its first dividend since 2008 on Friday, as strong profit growth boosted the company's confidence in its outlook.

Pre-tax profit rose over 40 percent to 142 million pounds ($228 million) in the first half to end-October, prompting Berkeley to announce a dividend of 15 pence per share to be paid next year, ahead of a larger planned capital return in 2015.

"We can do it all in September 2015 but we always said that the intention is...if we can, we will return modest dividends on the way," Rob Banks, group managing director, told Reuters.

"We've made a profit in the period so we've got more certainty that we can achieve the first milestone."

The news helped take shares in the company to a record high of 1,736 pence, rising over 5 percent on Friday morning, with brokers upgrading their target prices and forecasts.

"This dividend is not a material sum from the 1300 pence total return but could be more significant if there has been a policy shift to pay a more material running dividend," analysts at Peel Hunt said in a note.

Berkeley benefits from reliably high property prices in its core London market despite broader economic instability. While loan conditions for buyers remain tight, the rate of mortgage approvals rose more than forecast in October.

"London in particular is a city which remains a world centre of excellence, culture and business, and is central not just to Berkeley but to a recovery in the wider UK economy," Berkeley chairman Tony Pidgley said.

(Editing by Rosalba O'Brien)

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