Persimmon sees brighter outlook as house sales improve

HOUSEBUILDER Persimmon today said that sales are up 12% year-on-year with its current order book now totalling £1.14bn.

The York-based group, which is holding its annual general meeting at noon today at York Racecourse, said that the outlook has brightened since the start of the year when economic uncertainty and the freezing weather had affected sales with the order book then standing at £565m, down from £638m the previous year.

Shareholders will be told at the AGM – where group chairman John White will step down after 32 years with the company – that Persimmon is seeing improved margins, more visitors to its sites and lower cancellation levels of 16%.

While it expects the number of sales completed this year to be similar to 2010, the group said that the volume will increase in the second half of 2011 for its core Persimmon homes and more upmarket Charles Church properties.

Persimmon said that its strong cash position had allowed it to take action on its debt portfolio, repaying its remaining senior loan notes of £136.4m last month.

Earlier this month it arranged a new five-year £300m revolving credit facility with Royal Bank of Scotland, Lloyds Banking Group, Barclays, HSBC, Santander and Yorkshire Bank.

The group said that gearing was down to 6% at the end of March, compared to 17% a year ago and it said it will “continue to secure opportunities to grow our business further whilst maintaining our focus on margin growth”.

Persimmon also welcomed recent Government initiatives on planning and to encourage first-time buyers announced in the Budget.

It added: “Whilst an improvement in mortgage supply would improve market conditions, we are operating successfully at the current levels of activity.”

The group will give a further update on trading on July 5.

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