Confident performance from Persimmon
HOUSEBUILDER Persimmon said today that it has achieved a “significant increase” in underlying profit before tax for 2010.
In a trading update this morning ahead of its preliminary results for the year ended December 31, York-based Persimmon said it had legally completed 9,384 (2009: 8,976) homes at an average selling price of £167,000 generating a turnover of around £1.57bn.
This represents an increase on the 2009 performance of 4.5% on legal completions, a 6% improvement in average selling price of its homes, partly due to mix changes, and a 10% increase in turnover, the company said.
Persimmon said the increase in underlying pre-tax profits would be at the top end of analysts’ expectations.
Persimmon said it has also achieved a further significant reduction in net borrowings to £51m compared to £267m in December 2009.
The company said the reduction in net borrowings was well ahead of original expectations and is a result of its continued strategy to generate cash whilst maximising margins.
The company said it has continued to acquire new land through the remainder of the second half of the year on a selective basis and have acquired over 5,000 plots in the second half.
Persimmon said: “In our interim management statement on November 15 2010 we commented that we had not experienced the usual level of upturn in sales in the autumn period.
“Since that announcement most parts of the country have been affected by severe weather conditions for several weeks. Whilst, unsurprisingly, this has reduced the level of sales activity at our developments during the period, pricing has remained stable and the margins on our forward sales of c. £565m have been maintained at the levels achieved over recent months.
“We expect to open 70 new developments over the course of the next six months which will ensure our operating developments are maintained at current levels of 380 outlets. It is too early in the New Year to assess the likely outcome of the forthcoming Spring sales season. However, we believe that prospective purchasers who may have postponed visits to our developments due to the harsh weather conditions prior to the year end will return during the coming weeks.”
Persimmon also announced that after 32 years with the company, John White has informed the board of his decision to step down as chairman with effect from April 21.
He will be replaced by Nicholas Wrigley, who has been a non-executive director since 2006 and is an executive vice chairman of Rothschild, London.
