Persimmon profits soar as margins improve

Aaron Morby 12 years ago

Persimmon has dismissed talk of a softening housing market and staged a return to the big profits of a few years ago.

A tight grip on costs, kept lower than last year, and a higher number of completions at better prices helped Britain’s third biggest house builder return to past form.

Pre-tax profit for the year increased to £154m from £78m in the prior year.

Even before exceptional items, underlying profits came in a shade under £100m, strongly ahead of £7m last time.

Chief executive Mike Farley said: “Site activity for the first eight weeks of 2011 is encouraging.

“Visitor levels are around 10% ahead of the same period last year, cancellation rates of 16% remain at historically low levels and net private sale reservations are 2% ahead.”

“We continue to seek further cost improvements and efficiencies which, together with the introduction of new sites into production, will assist further progress in improving our operating profit margin,” he added.

Over last year, sales revenue rose 10% to £1.6bn as housing completions rose 4.5% to 9,384 homes and average selling price rose nearly 6% to £167,249.

The improvement came from a 3% rise in underlying selling price and  a change of mix of homes.

Persimmon managed to double operating margins to 8% in 2010, although they are still a long way from the margins achieved in the previous housing boom.

Home completions rose to 9,384 from 8,976 and the average selling price of Persimmon’s homes rose 5.7% to 167,249 pounds.

Persimmon currently has 380 sites in development and expects to open 70 sites in the first half of this year.

The house builder’s timber frame business Space 4 saw sales of housing kits rise 31% during the year to 2,738. Space4 has an order book of 3,000 units and expects to achieve double digit growth this year.

Its up-market southern housing arm Charles Church saw volumes recover strongly in the second half of the year with the business now accounting for a fifth of total completions.

The main Persimmon operating company won planning consents on strategic land parcels including 650 plots at Trowbridge and 200 plots at Cullompton in the South West.

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