Revenues and profits slump at listed house builder

York headquartered home builder Persimmon has seen its pre-tax profits fall in its half year results for the six months ended 30 June 2020.

It recorded pre-tax profits of £292.4m in the period, compared to £509.3m for the same period last year.

Total revenues for the first half of the year were £1.19bn (2019: £1.75bn), with new housing revenues of £1.10bn being 33% lower than the prior period (£1.65bn).

The Group completed 4,900 new homes (2019: 7,584) in the first six months at an average selling price of £225,066 (2019: £216,942).

In response to the outbreak of the pandemic earlier this year, the company says it began a shutdown of its sites from the end of March.

Work which was able to continue during the shut down focused on making all developments safe and secure, while the company completed homes for those customers who would otherwise have been left in a vulnerable position.

Persimmon’s report notes the total cost impact of this Covid-19 disruption was £11.3m.

Dave Jenkinson, group chief executive, said: “The Group, governed by its clear purpose and values, reacted responsibly, swiftly and effectively to the challenges of the Covid-19 pandemic, with the safety and wellbeing of our workforce, customers and local communities our first priority. 

“Taking an early decision not to take advantage of the furlough scheme for any colleagues, we maintained good momentum in the business, continuing to serve our customers, making detailed preparations for a safe return to work and, when it was appropriate, restarting our build programmes efficiently. 

“Build rates were back at pre-Covid levels by the end of the period. 

“Despite the significant disruption, the Group’s preparedness, agility and strength ensured a robust first half performance with 4,900 new home completions.

“The Group has had an excellent start to the second half with a c. 49% year on year increase in average weekly private sales rates per site since the start of July and a current forward order book of c. £2.5bn, a 21% increase on last year.

“Our strong opening work in progress position and excellent build rate through the summer give us confidence in a positive second half outturn.

“We expect that by the end of September, we will have delivered c. 45% of our anticipated second half new home legal completions.

“As a result of the continuing strong performance of the business through this challenging period, together with our cautious optimism on the Group’s prospects for the second half, we are pleased to announce that the Board is proposing a modest interim dividend of 40p per share.”

Commenting on the results, Russ Mould, investment director at AJ Bell, said Persimmon had been particularly successful at getting its operations back on track following the impact of Covid-19.

He added: “The key takeaway isn’t the 40%-plus slump in profit for the period but the big year-on-year jump in average weekly sales since the start of July and the continuing growth in its order book.

“The increase in average selling price was also a noteworthy achievement given the backdrop and the decision to pay a dividend, albeit a modest one, is a display of confidence in the outlook for the business.

“Income seekers will hope Persimmon can build on these foundations.

“The recovery in the UK housing market since lockdown eased has been remarkable.

“A mixture of pent-up demand and, for those with the means, an aspiration to add to living space or find a place with room for a home office after the experience of being stuck indoors for weeks on end will have supported the rebound.”