Profits double at Persimmon as sales falter

 
Marion Dakers
HOUSEBUILDER Persimmon warned yesterday that the weak mortgage market will continue to dampen sales this year, after almost doubling its pre-tax profit to £153.9m in 2010.

While Persimmon sold 4.5 per cent more homes last year, the firm said completions tailed off towards the end of 2010 amid a tough mortgage market and economic fears.

“This scale of [mortgage] activity remains significantly below normal levels and reflects the much reduced risk appetite of mortgage lenders,” the firm said in a statement.

The Bank of England yesterday echoed this sentiment, showing that mortgage approvals in January were around half the long-term average.

Persimmon’s sales revenue last year rose 10.5 per cent to £1.57bn, as sale prices rose 5.7 per cent to £167,249.

“We have always been a margin-focused business,” chief financial officer Mike Killoran told City A.M..

“We are keen to grow our margins and I think volumes for 2011 are probably going to be similar to where we left it in 2010.”

Persimmon said 28 per cent of its sales volumes in 2010 were supported by shared equity schemes such as the government’s HomeBuy Direct programme that ended last summer, allowing first-time buyers easier access to the housing ladder.

“We will continue to provide support for a little while yet, although what we are seeing in the market currently is that people are keen to take advantage of part-exchange offers,” said Killoran.

Persimmon shares lost 3.2 per cent yesterday to close at 455.3p.

FAST FACTS | PERSIMMON

The York-based housebuilder is one of the biggest in the country, selling 9,384 properties last year.

Persimmon bought 165 new sites last year to profit from the continued lack of new homes.