June 19, 2019 / 6:53 AM / a month ago

UPDATE 2-Shares in UK housebuilder Berkeley boosted after beats forecasts

* Pretax profit 775 mln pounds vs consensus of 730 mln

* Co sells more homes than year earlier

* Warns Brexit has hurt demand and supply

* Shares rise as much at 6% (Adds details on housing market, share move, background)

June 19 (Reuters) - Shares in British builder Berkeley Group Plc got a boost on Wednesday when annual profit fell less than forecast, reinforcing confidence in its ability to ride out a sluggish housing market.

The company, which operates primarily in the cities of London and Birmingham and southern England, said pretax profit fell 20.7% to 775 million pounds ($972.63 million) in the year ended April 30. But that was higher than analysts’ expectations of 730 million pounds, according to company compiled consensus estimates.

While house prices have been rising across the country, prices in London have fallen according to various indicators, hit by unaffordable levels for many buyers, tax changes and uncertainty over the Brexit process.

“The operating environment has been uncertain for three years, since the United Kingdom chose to leave the European Union, resulting in a lack of visibility in the political outlook,” Berkeley said in a statement.

“The increasing property tax burden since 2014, and a complicated, costly and bureaucratic planning system, it is unsurprising that both demand and supply are constrained at present,” the builder added.

Berkeley’s shares were 2% higher at 3,628 pence at 0715 GMT. Rivals Persimmon Plc and Barratt Development Plc were also up.

The company delivered 3,698 homes during the annual period, up from 3,678 in the previous year, while average selling prices increased 3.2% to 748,000 pounds.

Berkeley reiterated that pretax profit for 2019-20 is expected to fall by around a third from 2018-19.

“With management insisting no change in guidance reflects a cautious view given political uncertainty and no step back in the ambition or performance of the business, we believe the share price performance today may prove more resilient,” Jefferies analysts said. ($1 = 0.7968 pounds)

Reporting by Samantha Machado and Noor Zainab Hussain in Bengaluru Editing by Bernard Orr/Keith Weir

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