In contrast to a more restrained trading update issued in November, Persimmon (PSN) has revealed that it now expects profit for 2017 to be ahead of market expectations. Revenue last year was up 9 per cent at £3.42bn, with completions up by 6 per cent to 16,043 and average selling prices rising 3 per cent to around £213,000. There was no mention of operating margins, but it seems likely that these will be ahead of the previous year’s 24.8 per cent.
Despite the uncertainty caused by the Brexit negotiations and higher interest rates, demand for new houses remained brisk, with forward sales at the end of December up 10 per cent from the previous year at around £1.36bn. Around half of new purchasers took advantage of the Help to Buy scheme.
In a move to counter rising input costs, Persimmon now has its own operational brick manufacturing plant in Harworth, and further investment is expected to go into the group’s Space4 insulated frame build system. A total of 17,300 plots of new land were acquired in over 80 locations, indicating a replenishment rate equivalent to 110 per cent of output. A new division has also been opened in Ipswich, taking the total number of divisions to 30 from just 24 three years ago.
There was no mention of any change in dividend policy, but with free cash of around £1.3bn, it’s possible that some of this will find its way back to shareholders. Full-year results are due for release on 27 February.
