Pidgley calls on Brown to ‘do something positive’

Tony Pidgley, chief executive of Berkeley Group, has repeated calls for a cut in interest rates in the wake of the collapse of American investment bank Lehman Brothers.

He said the failure of Lehman may not have a direct impact on housebuilders, but action was needed to boost the feelgood factor among buyers.

Pidgley said: “Lehman isn’t the problem, but bad news like this will hurt our market. The next few weeks are key and if Gordon Brown did something positive, or if there was a cut in interest rates, it would help.”

His comments followed a trading update for the four months ended 31 August that said performance for the full year would be in line with the board’s expectations and that margins would be between 17% and 19%.

The consensus forecast for the year ended 30 April 2009 is for a pre-tax profit of £160m on turnover of £895m. The group’s position was bolstered by the fact that it started the financial year with £1.2bn of forward sales.

Pidgley took a swipe at rival housebuilders that have offered discounts and other incentives to boost sales. “We don’t have to give away add-ons or gimmicks like everyone else,” he said.

Despite the strong forecast for 2009, Pidgley conceded the market was “very difficult” and that sales in the four months were 50% below last year’s levels.

Aynsley Lammin, an analyst at Citigroup, said the company had a quality management team that was well-placed to take advantage of market conditions.

And Kaupthing analyst Kevin Cammack said the fact that Berkeley was likely to perform in line with expectations was “unheard of in the sector” at the moment.

Berkeley also announced net cash of £71m and the deferral of £363m to shareholders to boost its land-buying capacity. Cammack said: “It has a £200m-plus war chest to re-enter the land market on a vulture fund basis and there’s no better management to entrust this investment to.”