Persimmon wary despite sales rise
HOUSE builder Persimmon reported higher sales and improved debt for the first half of the year, but said consumer uncertainty following the election and the emergency Budget had dampened its outlook.
The country’s largest house builder by market value said legal completions on properties in the first half increased by 16 per cent to 4,657 homes, with the average selling price rising by eight per cent to £168,500.
The figures translate to annual sales of around £1.5bn, up 13.8 per cent year on year.
But the chief executive Mike Farley said sales had been hit by a cautious mood in house buyers following the Budget on 22 June, though this dip was in line with expectations.
“How severely people take the Budget, that is the fundamental issue for us, that is something we won’t know more about until the autumn,” he said.
Persimmon said operating margins increased to 7.5 per cent from 1.5 per cent last year, in line with the group’s strategy of improving margins and lowering debt, which fell to £122m from £494m.
Persimmon acquired 4,000 land plots in the last six months at what the company said were attractive margins, and has agreed terms on another 3,500. However, the company said it remained cautious about the future.
Rival builder Taylor Wimpey said last week that sales had picked up since a drop-off
around the election in May.
But British house price growth has stalled, with a rise of just 0.1 per cent in June
according to Nationwide, while Halifax reported a drop in prices in May.
KBC Hunt issued a “sell” note, saying: “The first half of 2010 is likely to prove to have been like the last days of Rome for the new homes market…We see another step down after the comprehensive spending review in late October, when the extent of public sector cuts is unveiled.”
Shares closed up 6.2 per cent at 370.2p yesterday.