Builder cautious but still raises forecasts
HOUSEBUILDER PERSIMMON has raised its annual profit forecast after opening a number of new developments, which include a new business based at Harworth, near Doncaster, which will support growth across the Yorkshire region.
The York-based firm said it is mindful of market cycle risks and wider economic uncertainties, including those associated with Brexit. As a result, it said it has taken a selective approach when acquiring new land plots.
The group said while the future performance of the UK economy is currently subject to increased levels of uncertainty, it is well positioned thanks to its network of selling outlets, range of house types at affordable prices, land bank and conservative financial structure.
The FTSE 100-listed company said pre-tax profits for 2018 will be modestly ahead of market consensus after it opened over 1,000 new selling outlets and delivered more than 97,000 new homes to the market, increasing yearly production by 75 per cent.
Persimmon said the housing sector has benefited from robust employment levels, low interest rates and a competitive mortgage market that all supported consumer confidence and demand.
In the year to December 31, group revenue rose 4 per cent to £3.74bn, with new housing revenue increasing 4 per cent to £3.55bn. Total completions rose by 406 new homes to 16,449, up 3 per cent, with the average selling price up by 1 per cent to £215,560 from £213,321.
For the current year, Persimmon’s forward sales are ahead 3 per cent to £1.4bn.
Persimmon said it delivered another strong trading performance in 2018, with disciplined growth.
The group said it is committed to increasing new home construction to meet market demand and has made a significant contribution to increasing UK housing supply since the launch of its new strategy in 2012. Over this period it has opened 1,370 new selling outlets and delivered 97,175 new homes to the market, increasing its annual production by over 75 per cent.
The firm now has 31 housebuilding businesses across the UK, having opened seven new businesses over the last four years.
It opened a new business based at Harworth, near Doncaster, on January 2 to support growth across Yorkshire. It hopes to identify similar regional expansion opportunities and said it will continue to invest in both its infrastructure and people to support further growth.
“The group is currently building new homes on around 365 active developments, a similar number to the same point last year, offering a good range and choice of family homes for firsttime buyers and home movers,” the firm said in a trading update.
“We will be adding to our outlet network with the launch of a variety of high quality new sites over the coming weeks and are looking forward to the new spring season with a robust development pipeline.”
The group acquired over 17,000 plots of new land in over 80 locations through the year.
Richard Hunter, head of markets at interactive investor, said: “Persimmon has delivered another strong update, but the potential of a wrecking ball continues to overhang the sector.
“With one large exception – in the form of the fallout, whatever it may be, from Brexit – the housebuilders find themselves in a sweet spot at the moment. The lack of housing supply has been recognised by the Government, particularly with regard to the recently extended Help to Buy scheme, with further tailwinds coming in the form of improving employment numbers, historically low interest rates and ample mortgage availability.”
Persimmon recently came under fire by politicians and shareholders over a £75m pay packet for its former CEO Jeff Fairburn, who left the company last year.