Housebuilder points to signs of stabilisation as it writes back £27.9m on the value of its landbank
Pre-tax profit at Persimmon has fallen 74% from £36.9m to £9.8m, despite a write back of £27.9m on the value of its assets.
The write back indicates the company was too conservative with land writedowns earlier this year.
Reporting its results for the six months to 30 June, the housebuilder said turnover had fallen 39% from £998.4m to £611.8m, although it pointed to signs of stabilisation in the market.
Chairman John White said: “We expect sales rates to remain resilient due to the successful destocking that has occurred in the industry combined with the continuing good levels of underlying demand for new homes in the UK.
“Recently, selling prices have stabilised in most parts of mainland UK. Future volume increases and price movements will be dependent upon mortgage availability, job prospects and the health of the general economy.”
The company has reduced debt from £906m a year ago to £484.2m, and chief executive Mike Farley said it would fall to below £400m by the end of the year.
He said it made the prospect of a rights issue at the company less likely. “With debt of £400m on a £1bn facility, we have the headroom to be able to go into the market.”
Asked whether there were many opportunities to buy land at the moment, Farley said: “There is not a huge amount out there, no.”
Legal completions were 4,006, compared with 5,501 last year, while the average selling price fell 14% from £181,485 to £155,524.
Some analysts said the £9.8m reported profit was small but Farley said cash generation was the key. He said: “Re-growing profitability is something we'll do in the longer term.”