Persimmon Issues Confident Outlook

Leading home builder Persimmon PLC, today posted a positive, but cautious report for the first half of the year. Reflecting the slight recovery experienced in the wider housing market for this period, Persimmon released the following figures:

• Legal completions grew by 16%, from 4,006 to 4,657 compared to the same period last year.

• Turnover for the period increased by roughly 26% to £785 million

• Sales increased by 20% (helped by ~8% rise in average house prices)

While these figures show a positive start to the year, they were tempered by news that the seasonal decline in private sale reservations was worsened by uncertainty surrounding the announcement of the Government's Budget proposals. Despite this Persimmon claims that sales have continued in line with expectation since the Budget's introduction. The full set of results will be released on 26th August, but already some have questioned the tone of Persimmon's release.

In an article for the Independent yesterday, property broker Investec, said "anecdotal evidence from unquoted industry sources "paints a markedly more downbeat picture of the market" than stock market announcements from quoted companies, adding: "In our view, management of the quoted companies sounds more nervous in tone in conversation than is immediately apparent in their published statements."

Fellow house builder Taylor Wimpey last week released its own update. While positive, the report was less bullish than that of Persimmon. It claims that figures are in line with market expectations, but citing the growing broader economic uncertainty, said it would remain cautious with the scale and pricing of its land buying for the foreseeable future. As such, the company's focus will be to achieve price improvement rather than increases in volume.

Another key player in the new homes market, Bovis Homes, will issue its own trading statement this Friday. Short of any major upsets, it is thought that it will report positive figures similar to that of Persimmon and Taylor Wimpey.  

Sources: RTT | Persimmon | Independent