Persimmon’s profits jump 30pc as it shrugs off slowdown fears
FTSE 100 house builder Persimmon has reported a 30pc jump in profits in the first half of the year as it avoided the effects of a slowdown in the housing market.
Persimmon’s pre-tax profits rose 30pc to £457.5m in the six months ended June 30, while revenues were up 12pc to £1.66bn.
It built 556 new homes in the period, an increase in completions of 8pc to a total 7,794, as it made the business more efficient. Its average selling price rose 4pc to £213,262.
“The market remains confident,” said Jeff Fairburn, Persimmon chief executive. “Interest in our developments remains strong with encouraging levels of interest through both our websites and our sales outlets as we trade through the quieter summer weeks.
“Whilst we remain vigilant to changes in conditions we also recognise we are in a strong position to take advantage of opportunities that arise.” However the company said it would “remain cautious” when it comes to investing in new land, primarily due to Brexit-induced uncertainty.
It was boosted by the Governmentbacked scheme Help to Buy, which Anthony Codling, an analyst at Jefferies, said was “acting as a bullet-proof vest for the new-build sector allowing it to ride above the challenges faced by the second hand market”.
He added: “Persimmon [is] continuing to balance the market’s appetite for more new homes with investors’ desires for higher cash returns.”
The house building giant sells around half of its homes using the scheme, which allows buyers to purchase a new-build property with a 5pc deposit. Earlier this month, Persimmon’s share price fell 6.6pc in one day after a news report suggested that Help to Buy could be ended before its planned date of 2021. After the Government confirmed it would not, the share price rebounded. They closed 1.8pc at £26.01.
Mr Fairburn said: “We should take confidence from the fact the scheme works very well. The Government should be pleased it stimulated house building, and more people can buy new houses.”
Laith Khalaf, a senior analyst at Hargreaves Lansdown, said: “The latest results from Persimmon have a bit of swagger about them, and well they might, with profits rising by almost a third despite a slowdown in economic growth.
“The sector is still sitting pretty, with interest rates low, the Help to Buy scheme supporting demand, and a lack of supply helping to boost prices.”