Housebuilder Persimmon’s pre-tax profit tumbled 42 per cent in the first half of the year, but the company said it had had an “excellent start” to the second half as market sentiment improved.
Persimmon’s profit before tax fell 42 per cent to £292.4m in the six months ending 30 June, down from £509.3m a year earlier.
Home completions fell 35 per cent to 4,900 in the first half from 7,584 in 2019.
Total group revenue dropped to 32 per cent to £1.19bn from £1.75bn in the first half of the previous year.
Persimmon proposed a dividend of 40p per share. That compared to a dividend of 235p per share in the year for 2019.
Why it’s interesting
The government completely froze the housing market at the end of March and the whole of May as part of its efforts to curtail the spread of coronavirus.
It caused housebuilders’ share prices to crash as activity dried up. Persimmon more than halved in value on the stock market.
But house prices have provided surprisingly resilient amid the worst recession in modern history. They – and housebuilders and estate agents – have been helped by pent-up demand during lockdown and the stamp duty cut from chancellor Rishi Sunak.
Persimmon today said that in the second half of the year it had already had a roughly 50 per cent increase in average weekly private sales rates per site. It said its current forward order book was around £2.5bn, a 21 per cent increase on last year.
What Persimmon said
Dave Jenkinson, Group Chief Executive, said there had been “significant disruption”. But he added: “The group’s preparedness, agility and strength ensured a robust first half performance with 4,900 new home completions.”
He said that “cautious optimism” meant Persimmon proposed “a modest interim dividend of 40p per share”.
“Our strong opening work in progress position and excellent build rate through the summer give us confidence in a positive second half outturn.”