Housebuilder Persimmon has announced it expects a 50% hike in its full-year pre-tax profits, in an upbeat trading statement released today.
The company said the increase forecast in its annual results on Tuesday 28 February would come as a result of a significant improvement in underlying operating profitability, combined with a reduction in net finance costs.
Persimmon said its underlying operating margin for the year will approach 10%, with a margin for the second half of more than 10.5% giving it a profit “towards the top end of analysts’ expectations”.
“In line with our stated strategy, we continue to focus on delivering increasing profitability through a combination of securing improvements in existing planning permissions, good cost control, opening new outlets from recently acquired land and the conversion of land from our significant strategic land bank for future development” it added.
As indicated in its interim management statement in November, new home legal completions were maintained year-on-year at 9,360, slightly down on 9,384 in 2010.
The group said that total revenues for the period were around £1.53bn.
Take-up of the government’s FirstBuy Scheme was “encouraging”; the group had legally completed more starter homes in 2011 at an average selling price 2% lower than that of the previous year, at around £164,000.
Legal completions of new homes in the second half of the year were more than 4% higher than for the previous year, at 4,921.
The group said it continued to generate good levels of free cashflow and held around £40m of cash balances at 31 December 2011, compared with borrowings of £51m at the same time last year.
It bought around 7,000 plots of high-quality new land in the second half of 2011. Plots owned and under control in its consented landbank at 31 December 2011 totalled around 63,500, plots compared with 58,862 in 2010.
The statement said: “While the general economic backdrop to the UK housing market remains challenging, we have experienced encouraging levels of visitors, resilient sales reservations, low cancellation rates and stable prices.
“As previously reported, we saw a return of the traditionally stronger autumn selling season in 2011.
“The improvement in the rate of sale when compared to the prior year has continued, and as a result we have forward sales of £615m (2010: £565m) which places us in a strong position moving into the new year.
“The availability of mortgage credit remains constrained. We welcome the government’s action in working with both the housebuilding industry and the mortgage lenders to secure the introduction of a 95% loan-to-value”
bridget.oconnell@estatesgazette.com
