Persimmon profit tops £1bn as margin soars to 31%

Aaron Morby 5 years ago

House builder Persimmon’s pre-tax profits topped £1bn for the first time last year.

David Jenkinson takes the helm as house builder posts record profits
David Jenkinson takes the helm as house builder posts record profits

The firm posted record profits after seeing share price falls yesterday following reports the government is examining Persimmon’s practices under the Help to Buy scheme for first-time buyers.

This morning Persimmon announced that Dave Jenkinson, who took up the role of interim group chief executive after the departure of Jeff Fairburn amid controversy over his £75m pay package, will assume the role permanently.

Further operating margin growth from 28% previously to 31% drove pre-tax profit up 13% to £1.09bn.

But with housing completions up by little more than one new home a day last year to 16,449, revenue only edged up 4% to £3.7bn.

Looking ahead, Jenkinson said: “Including legal completions taken so far in 2019, the group has a strong forward sales position at £2.02bn and we currently anticipate delivering a similar level of legal completions during 2019 as in the prior year.”

He added: “We support the government’s initiatives to assist the increase in output from the industry towards its goal of reaching 300,000 new homes built each year, across multiple tenures, by the mid-2020’s.

“We remain keen to contribute to this increase in new home delivery and the group is well positioned in its local markets with its attractively designed core house types, offering homes at more affordable prices on developments.”

“However, we will remain vigilant to changing conditions in the sales and land markets to ensure we continue to judge our land replacement activity appropriately, recognising that the negotiations associated with the UK’s exit from the EU present key uncertainties that may have a significant influence on market outcomes.”

Direct building material delivery

The Group has invested in its own brick manufacturing facility based at Harworth near Doncaster which has the capacity to manufacture c. 80m bricks per annum. This secures the availability and quality of supply for approximately two thirds of the Group’s brick requirements.

Similarly, the Group is currently constructing its own roof tile manufacturing facility, based on the same site in Doncaster. We aim to commence the supply of roof tiles to Group sites in the second half of 2019.  In addition, we have continued to invest in the Group’s Space4 timber frame construction technology which has increased its production capacity by c. 19% to c. 9,500 units per year, consisting of c. 7,750 timber frames and c. 1,750 ‘room in the roof’ systems.

Each of these projects will help the Group to increase certainty of quality and supply of key materials and support improved operating efficiencies.

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