December 7, 2018 / 7:38 AM / 7 months ago

UPDATE 2-Housebuilder Berkeley sticks with profit guidance amid mounting Brexit worries

* Analysts, investors cheer results against tough conditions

* Says some competitors leaving London

* Warns on short-term outlook because of Brexit (Adds CEO, analyst comments, share movement)

By Noor Zainab Hussain and Tanishaa Nadkar

Dec 7 (Reuters) - Housebuilder Berkeley Group maintained its profit guidance for the next couple of years, even as London’s housing market reels ahead of Britain’s exit from the European Union.

Berkeley on Friday posted a sharp drop in first-half pretax profit and said its short-term outlook was uncertain because of the ongoing Brexit talks and a number of other unspecified headwinds in its London and the South East markets.

Pretax profit fell 25.7 percent to 401.2 million pounds ($511.8 million) in the six months ended Oct. 31.

However, the company’s shares were 2.7 percent higher at 3,411 pence at 0855 GMT, as analysts and investors thought results were not as bad as they could have been considering the economic and political uncertainty.

Berkeley also raised its full-year pretax profit forecast by more than 5 percent and kept its guidance for next two years unchanged.

UBS analysts said their guidance was raised to 710 million pounds-730 million pounds. Berkeley posted pretax profit of 935 million pounds last year.

“We think these long-term projections have to be seen in the context of a very high degree of macroeconomic uncertainty surrounding the UK’s exit from the EU, so are likely cautiously struck,” UBS analysts said.

British house prices rose at their slowest pace in six years in the three months to November, mortgage lender Halifax said on Friday, the latest sign of weakness in the housing market as Brexit approaches.

The company delivered 2,027 homes in the first half, down from 2,190 last year. Most of the demand was from overseas investors, Chief Executive Officer Rob Perrins told Reuters.

“These are strong results from Berkeley. Upgraded profits and a balance sheet that looks even more resolute has given the group the confidence to promise a steady flow of shareholder returns all the way out to 2025,” George Salmon, Equity Analyst at Hargreaves Lansdown, said.

“However ... sentiment will remain closely tied to the Brexit barometer, since London could well be in the eye of the storm should a disorderly departure trigger a housing meltdown.”

UK house prices, growing for most of the past 25 years, have softened in the past year as the government struggled to find its way through Brexit talks and speculation mounted that thousands of financial and other jobs could leave the country.

“We’re maintaining our construction levels in London ... starts in London have fallen 30 percent and ... a lot of our competitors have stated they are leaving London,” Perrins said.

The days of London house price rises hugely outpacing inflation will not be returning anytime soon, even if Britain approves the Brexit deal, the vast majority of economists and analysts polled by Reuters said in November.

1 = 0.7839 pounds Reporting by Tanishaa Nadkar and Noor Zainab Hussain in Bengaluru; Editing by Sai Sachin Ravikumar and Toby Chopra

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