It’s been a rough old year for Berkeley, the UK housebuilder: in the 12 months to April, its pre-tax profits slumped to £120m, down 38% from last year’s figure of £194m, while revenues were down almost 30% to just over £700m. No great surprise there: pretty much everyone in the sector has had a rotten year, thanks to the collapse of the housing market, and Berkeley’s actually done better than most. But the big news from today’s results was that Tony Pidgley, the man who co-founded Berkeley and has run the business for over 30 years, is moving upstairs to take the chairman role. A sign that he thinks the company is through the worst?
Pidgley is being replaced as MD (insofar as such a larger-than-life character can be replaced) by his finance director Rob Perrins. This wasn’t totally unexpected, but the timing seems to have taken some people by surprise. Pidgley hadn’t given any previous indication of when he was planning to step back from the day-to-day grind, and with Berkeley yet to fully emerge from one of its most challenging trading periods in its history, he might well have chosen to hang on until the housebuilder was clearly back on an upwards trajectory. Particularly since Victoria Mitchell, who he’s replacing as chairman, was herself only appointed two years ago (she’s now stepping down to become deputy chairman).
Berkeley admitted today that the last year had been ‘extremely challenging’, with the ‘lack of visibility and reduced confidence’ typical of a downturn compounded by the difficulty buyers have had in obtaining new mortgages. Its prices fell about 20% during the period, and sales were still about 3% below expectations. However, things do seem to be perking up slightly: apparently ‘the last quarter has… seen an improvement in transaction levels and sales prices have stabilised’. And Berkeley also says that it’s got plenty of cash in the bank, which will hopefully allow it to pick up some cheap land in the coming months. So Pidgley clearly thought there was light at the end of the tunnel.
As he packs up his photo frames and moves upstairs, Pidgley has plenty to be proud of: in 33 years he’s built one of the UK’s most admired companies (it’s always there or thereabouts on MT's Most Admired list). He’s also been one of the more colourful characters in UK plc: raised by illiterate gypsies in an abandoned railway carriage, he’s never been shy of a scrap (even with his own son – see our 2003 profile for more). But as he hands over the reins to Perrin, we can’t help wondering: after 33 years, will he find it hard to avoid the temptation to be a back-seat driver?
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