Persimmon buoyed by bullish outlook

City A.M. Reporter
SHARES in house builder Persimmon rose 2.8 per cent yesterday after it said it expects its underlying full-year pre-tax profit to rise by half, helped by higher sales margins, and said it was confident of further growth in 2012 as first time buyer interest improves.

The largest UK housebuilder by market value said yesterday that tighter cost control and sales on higher margin land meant it expects underlying operating margin for the year to be around 10 per cent. Revenue for the year to 31 December was £1.53bn.

The group said that while the general economic backdrop to the UK housing market remained challenging it had seen encouraging visitor levels, sales reservations and stable prices. Forward sales stood at £615m compared to £565m in 2010, leaving it well placed for 2012.

“We will continue to focus on our operating margins as we start new sites. We’ve started 25 new sites in the last quarter and are scheduled to start another 60 sites in the first six months of this year,” Persimmon chief executive Mike Farley said.

“Those sites will probably be on newly acquired land and will have higher margins on them. I think in this environment we can still look to grow our profitability even on fairly stable market conditions.”

Persimmon completed 9,360 homes in the period, in line with the previous year. Its average selling price stood at £164,000, down two per cent on the previous year, due to the rise in the number of first time buyers aided by the government’s FirstBuy shared equity scheme.