UK builder Persimmon hopes for modest sales growth in 2018

LONDON: Britain’s second-biggest housebuilder Persimmon hopes to achieve a modest increase in sales this year after saying it expected to beat market expectations on 2017 profits as it sold more homes.

CEO Jeff Fairburn also defended an incentive plan which could see top management make a profit of more than £200 million ($268 million) on share options, including around £110 million for himself.

Persimmon is one of several builders in Britain to benefit from years of rising house prices and government incentive schemes, which the sector has been criticized for over not building enough affordable housing.

On Tuesday, Persimmon reported a 9 percent rise in revenue to £3.42 billion and said its pre-tax profit would be “modestly ahead” of market expectations, which stand at £957 million, according to a Thomson Reuters poll.

It said forward sales were up 10 percent at the end of 2017 to £1.35 billion and it hoped for a further increase in demand this year.

“It really largely depends on the number of selling outlets that we can bring through the process and bring onto site as soon as possible so I think broadly similar but aiming for a modest increase,” said Fairburn.

In December, Persimmon said its chairman and the head of its pay committee would quit after they failed to curb an incentive plan introduced in 2012 which will allow Fairburn, the firm’s finance director and managing director to jointly gain around £240 million before tax.

Fairburn defended the plan on Tuesday but said he had yet to decide whether to exercise his share options at the moment.

“This was a scheme that was launched at a time where the business was looking to move forward, there were stretching targets,” he told Reuters.

“Nobody has yet exercised any of those share options. From my own perspective, I have not made a decision and I’ll continue to review that,” he said.