Housebuilder cautious on current trading environment after weak end to 2010
Housebuilder Persimmon has marginally exceeded analysts’ expectations by reporting pre-tax profits of £95.5m for 2010, a 14-fold increase on its profits in 2009.
The profit was achieved on revenues up 10.5% to £1.57bn, and was further boosted by an £80m exceptional credit due to the rising value of the builder’s land bank. After all exceptional items, Persimmon’s profit was £153.9m.
The number of homes it built also rose by 4.5%, to 9,384, with the average selling price increasing by 5.7%.
However, a much weaker end to the 2010 means the firm is currently behind its 2010 performance in terms of forward sales. So far it has achieved £848m of forward sales for 2011, compared to £898m in 2010. The firm said that prices this year had remained “stable”, rather than continuing to rise.
Outgoing chairman John White, who will step down in April, said Persimmon was continuing to open new developments, but hinted the firm was not envisaging expansion in the current market. “The current levels of visitors to our developments and the interest in our homes is encouraging,” he said.
“Of course, we would like to see an increase in mortgage approvals and an increase in loan to value products for first time buyers. However, the organisation, scale and cost base of the Group enable us to operate successfully at the current levels of activity.”
Kevin Cammack, analyst at Cenkos, said the results were “absolutely no surprise” but that the comments on current trading were “a tad disappointing,” with reservation levels up just 2%.