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Persimmon expects pre-tax profits ahead of market forecasts
UK housebuilding giant Persimmon has announced it expects pre-tax profits for 2017 to be “modestly ahead” of market expectations, following significant revenue growth.
The corporation, the country’s second-largest builder of new homes, demonstrated a 9% increase in revenue from 2016 in preliminary results for last year announced to the stock market yesterday – taking in £3.4bn, up from £3.14bn in 2016.
Growth was aided by a 6% increase in legal completion volumes, with 872 more new homes built in 2017 compared to the previous year.
As a result it said it “anticipates our pre-tax profits for the year will be modestly ahead of market consensus”.
In total, Persimmon completed 16,043 homes last year, increasing from 15,171 in 2016.
Average selling price for the group also increased by 3% to £213,000, up from £206,765 in 2016.
Jeff Fairburn, chief executive of the company, said this statistic showed Persimmon “continues to target first-time buyers and first-time movers”.
Help to Buy now supports around half of Persimmon’s sales, according to The Times.
Mr Fairburn added: “We are helping people using the government incentive scheme, Help to Buy, to get onto the housing ladder.”
In a conference call following the stock market announcement, Mr Fairburn welcomed the government stamp duty exemption that was announced in November.
While Mr Fairburn said it was “early” to say if the exemption had an effect on sales, the corporation announced healthy customer demand for new homes, with a 10% increase on the value of forward sales at 31 December 2017 (circa £1,355m) compared with the same date in 2016 (£1,234m).
In the statement, the housebuilding company also revealed it had acquired 17,300 plots of new land throughout the UK over the year, and held cash balances of £1.3bn – up from £913m in 2016.
It added: “We remain mindful of market risks including those associated with the uncertainty arising from the UK leaving the EU.
“However, we are keen to deliver further improvement in our housing output and remain ready to invest wherever the local planning environment is supportive.”
Mr Fairburn became embroiled in controversy in November when it was revealed he was set to be paid more than £110m as part of a bonus scheme.
In an interview with The Times earlier today, Mr Fairburn defended the scheme as an “important driver” behind growth in the business.
Persimmon said final results for the year will be released on 27 February.
