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Mon June 21 2021

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Persimmon full of post-Brexit optimism as profits surge

23 Aug 16 House-builder Persimmon has reported a 29% jump in half-year profits and is expecting further growth in the months ahead as it steps up output.

In the first six months of 2016 Persimmon increased total revenues by 12% year on year to £1,489.3m (2015 H1: £1,332.5m). Sales volumes increased by 6% to 7,238 new home legal completions (2015 H1: 6,855) with an average selling price 6% higher at £205,762 (2015 H1: £194,378).

Pre-tax profit for the half-year was up 29% to £352.3m (2015 H1: £272.8m), with underlying operating margin improving from 20.5% last year to 23.8%.

Group chief executive Jeff Fairburn said: "Persimmon's robust trading performance in the first half of 2016 was driven by our continued focus on meeting market demand to deliver controlled sustainable growth. The group's strong cash generation has supported further disciplined land investment embedding value for the future.

"While the result of the EU referendum has created increased economic uncertainty, customer interest since then has been robust with visitor numbers to our sites around 20% ahead year on year.  Our private sale reservation rate since 1 July is currently 17% ahead of the same period last year. The group is now trading through the traditionally slower summer weeks but customer demand remains encouraging and we anticipate a good autumn sales season."

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Persimmon has already opened 48 new sites in July and August and plans to open a further 90 or so new outlets before the end of the year.

“We expect these new sites to support further improvement in the group's gross margins as home sales from these outlets are legally completed over coming months,” said chairman Nicholas Wrigley.

He added: “The UK economy currently enjoys improved and resilient employment levels and some improvement in real disposable incomes. With the cost of mortgage funding remaining at compelling levels, which is set to be supported by a competitive but disciplined lending market for some time to come, the housing market across our regions remains confident. We are encouraged by the continued healthy demand for mortgage support with lenders approving c. 198,000 loans for house purchase during the second quarter of the year, a very similar number when compared with the same period last year which was buoyed by last year's general election result. We anticipate a good autumn sales season once the summer holiday period comes to an end in early September.

"We plan to increase our build activity and productivity to continue the sustainable growth of the business to reach optimal scale in each of our regional markets. We aim to improve the availability of stock for our customers whilst the prompt delivery of each new home will continue to support the excellent level of group returns. We anticipate our cash generation will remain strong.”

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