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Persimmon PLC on Wednesday said strong house prices are offsetting cost inflation, though its half-year earnings declined.
The FTSE 100-listed company said revenue in the half-year to June 30 fell 8.3% to £1.69 billion from £1.84 billion a year ago. Completions during the half amounted to 6,652 new homes, down from 7,406 a year earlier, as expected.
‘Legal completions, as anticipated, were lower than the prior year and reflect delays in achieving planning consents on our new outlet openings,’ it said.
Pretax profit declined 8.4% to £439.7 million from £480.1 million.
Despite the fall in profit, the York-based housebuilder remained optimistic: ‘While near term uncertainties continue the longer-term fundamentals remain strong,’ it said.
It continues to target around 10% growth in active outlets by the end of 2022.
‘Persimmon continues to perform well. We are making important progress in quality, service, land investment opportunities and efficiencies to build an even stronger business, while continuing to deliver the strong financial returns that Persimmon is renowned for. Demand for our attractively priced, high quality homes has remained robust, with our average private sales rates for the period being 1% ahead year-on-year,’ said Chief Executive Dean Finch.
‘We are on track to achieve a 10% increase in our active outlets by the end of the current year as we work to rebuild our outlet position after a land buying pause three years ago and are tackling the on-going challenges in the planning system. We are stepping up proactive engagement with local authorities, enhancing our approach to developing attractive communities and raising the bar on design to help mitigate planning challenges. We continue to expect our volume delivery to be significantly higher in the second half of the year.’
Persimmon said that ‘sales price inflation is currently mitigating the cost inflation the industry is experiencing’. The new home average selling price was £245,597 during the period, up from £236,199 a year earlier.
The company said it has had a ‘robust’ start to the second half, and backed guidance of 14,500 to 15,000 completions for the full year.
Persimmon shares were 0.2% lower at 1,844.50 pence each in London on Wednesday morning.
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