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Persimmon raises profit forecast after building more homes

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  • 15/01/2019
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Housebuilder Persimmon has hiked full-year profit expectations, driven by an increase in homes production as well as a robust housing market in the UK.

 

Persimmon said it predicts 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%.

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.

For 2018, group revenue rose by four per cent to £3.7bn, with new housing revenue increasing by four per cent to £3.55bn.

Rising revenues were supported by continued customer demand with high employment levels and competitive mortgages.

Total completions rose by 406 new homes to 16,449, a three per cent increase on the year earlier, with the average selling price up by one per cent to £215,560.

For the current year, Persimmons’s forward sales are ahead three per cent to £1.4bn.

 

Encouraging outlook

Helal Miah, investment research analyst at The Share Centre, said: “Persimmon has published a trading update showing a group performing well but at the same time provided a relatively mixed picture against the consensus expectations.

“Going forward the group’s strategy and outlook paints an encouraging outlook as they continue to expand on the number of sites to boost production and remains one of the few taking a proactive approach developing their own manufacturing facilities for bricks, roof tiles and frames.

“This is good news in a market where competition for resources and labour costs continue to rise. Our major concern for Persimmon and all the housebuilders is the outcome and the uncertainty over the Brexit situation.

“At this moment in time we are talking a relative positive outlook as a No Deal scenario looks unlikely, should this change though we fear a downturn for the housebuilders to come. We continue to recommend the shares as a higher risk ‘hold’ for investors.”

Persimmon recently came under fire by politicians and shareholders over a £75m pay packet for its former boss Jeff Fairburn, who left the company at the end of last year.

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