Persimmon expects profits to be 9% higher this year

January 9, 2018 / Isla MacFarlane
Persimmon expects profits to be 9% higher this year

In an upbeat trading notice, Persimmon said that revenues for 2017 were at £3.42bn, 9% higher than the £3.14bn recorded in 2016. Legal completion volumes are also ahead by 872 new homes (6% increase) to 16,043 (2016: 15,171). The Group’s average selling price increased by 3% to c. £213,300 (2016: £206,765).

“We continued to experience healthy customer demand for new homes through the autumn sales season and the value of our forward sales at 31 December 2017 of c. £1,355m was 10% ahead of the prior year (2016: £1,234m),” the trading statement said. “Second half legal completion volumes of 8,249 were 455 stronger than for the first half of the year (H1: 7,794), an increase of 6%.”

Persimmon said that it expects its pre-tax profits for the year to be modestly ahead of market consensus.

“We opened a new operating business in Mansfield, north of Nottingham, on 2 January 2017 which has made good progress, legally completing 373 new homes in 2017,” the statement continued. “In addition, on 2 January 2018, we launched a new business based near Ipswich in Suffolk to improve our operational capability and supplement our existing operations in the east of England.

“Over the last three years we have opened six new offices, raising the number of regional house building businesses within the Group from 24 to 30 demonstrating our commitment to increasing supply where there is good demand and we will continue to explore opportunities for further growth.”

The Group opened 197 new sales outlets during the year and is building on all sites which have an implementable planning consent. The Group now has 375 active sales outlets which we anticipate will provide good support to sales moving into the 2018 spring selling season.

“We have made excellent progress in expanding our manufacturing capabilities to support our desire to achieve sustainable growth,” the Group said. “Our new brick manufacturing plant in Harworth, near Doncaster, is now complete and deliveries of bricks to site have commenced, underpinning our ability to increase house building volumes.

“The Group’s Space4 insulated frame build-system is also an important contributor to our overall construction capacity and we anticipate further investment in expanding this capability over the coming years.

“We continue to invest for future growth and have acquired c. 17,300 plots of new land at excellent margins in over 80 locations throughout the UK during the year. 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.”

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