Persimmon on track for FY completions at top end of guidance

Housebuilder Persimmon reported a decline in first-half pre-tax profit on Thursday but said it was on track to deliver full-year completions at the top end of guidance.

In the six months to the end of June, reported pre-tax profit fell to £146.3m from £151m in the same period a year earlier. Total group revenue rose to £1.3bn from £1.2bn and completions came in at 4,445, up 5%.

The average selling price was up 3% at £263,288.

Persimmon said it was on course for around 10,500 completions for the full year, at the top end of previous guidance. It pointed out that since 1 July, the net private sales rate is 0.69, up 68% on the prior year.

The company said it was encouraged by the early announcements of the new government, particularly around planning.

In addition, it noted that its customers are benefiting from improving mortgage rates, which have led to a strong pick-up in enquiries and visitors.

"Consumer confidence continues to improve leading to a strong pick up in enquiries and visitors, which will be further supported by the recent cut to the Bank of England base rate," it said.

Chief executive Dean Finch said: "Persimmon is a growing company with growing opportunities. The first half of the year has been strong with improved sales rates and robust average selling prices, despite ongoing affordability challenges.

"Strengthening consumer sentiment, improving macro-economic conditions and the government's welcome and ambitious planning reforms that demand more of the high quality, affordable homes that are Persimmon's core strength, are all supportive of our ambition to grow this year and in the future.

"We are opening more sites this year and will do the same next year, demonstrating the benefit of our continued land investment in recent years. This growing and strong platform means we are ready to deliver more of the homes our country requires while securing industry-leading returns over the medium-term."

At 0945 BST, the shares were up 2.3% at 1,574.25p.

Russ Mould, investment director at AJ Bell, said: "News leading housebuilder Persimmon delivered completions at the top end of its previous guidance will be music to the ears of a new Labour government which has prioritised increasing the supply of new homes.

"But, while Persimmon did specifically reference recently loosened planning laws alongside its first-half results, the big driver is ultimately signs of improved demand - with the Bank of England’s first rate cut representing a significant moment.

"The housebuilding sector is heavily reliant on the availability of affordable mortgages and, from that point of view, the trajectory of borrowing rates is heading in the right direction.

"Continuing build cost inflation and a fairly soggy property market helped constrain margins in the first six months of the year and investors will increasingly want to see evidence of these green shoots translating into improved profitability."