Construction: First half profits at house builder Persimmon up 57%
11:59 19 August 2014
House builder Persimmon today reported a 57% rise in first half earnings after taking advantage of the buoyant UK property market.
The FTSE 100 listed group said underlying pre-tax profits rose to £212.9million for the six months to the end of June.
Revenues were up 33% at £1.2billion while completed sales increased 28% to 6,408, with the average selling price up 4.3% to £186,970.
Chief executive Jeff Fairburn said: “Persimmon has produced another strong performance in the first half of 2014, taking advantage of the current market opportunities to deliver growth whilst strengthening the financial position of the business.”
The results come a day after rival Bovis Homes reported a 166% rise in half-year profits but there have been mixed signals from other parts of the market, with the Nationwide Building Society reporting a fall in quarterly gross mortgage lending and some evidence from estate agents of a fall in asking prices.
Persimmon’s results cover a period when new rules for lenders on checking whether borrowers can afford their loan − the Mortgage Market Review − have been introduced, and Nationwide said these had had some effect as its lending fell.
However, Persimmon said that, while it had now entered the traditionally slower summer trading weeks, private sale reservation rates were ahead of last year and forward sales from July 1 were running at £1.53bn, 22% ahead of the same period in 2013.
Persimmon’s current developments in Suffolk and Essex include sites in Hadleigh, Colchester, Chelmsford and Saffron Walden, with others due to follow shortly in Lowestoft, Ixworth and Kentford.
Company chairman Nicholas Wrigley said: “We anticipate that mortgage lenders will continue to actively develop their participation in the UK mortgage market over the medium term.
“We welcome the continued discipline of mortgage lenders against the backdrop of the ongoing improvement in the UK’s wider economic performance which is supporting increased confidence in our regional markets.
“Disciplined lending in support of a keen appetite to purchase newly built homes from both first time buyers and existing home owners provides the opportunity for the housebuilding industry to increase construction activity.
“The results for the first half of 2014 represent an excellent further step forward in achieving our strategic objectives.
“Whilst we remain vigilant about the continued challenges facing our markets emanating from events both at home and abroad I remain confident of Persimmon’s continued successful development.”
Shore Capital analyst Robin Hardy said the profits were “a fraction higher” than expected and maintained a buy stance on the stock.