Persimmon posts sharp drop in 1H profit

Persimmon said that it was on track to meet expectations for full-year profit, despite higher mortgage rates, the removal of Help-to-Buy and "significant" market uncertainty.

Top line growth, excluding bulk sales, was described as "robust" at the half-year stage by the homebuilder, with private average selling prices increasing in its order book and costs savings achieved.

Revenues fell by 29.5% to £1.19bn, as new home completions decreased by 36% to 4,249. Profit before tax meanwhile shrank by 66% to £151m, driving earnings per share down from 106.5p to 34.4p.

"With the historic under-supply of homes the longer term outlook for housing remains positive," chief exceutive officer Dean Finch said.

"Persimmon has a proven track record of delivering strong returns through the cycle. I am confident that the combination of a relentless focus on our key enduring strengths while enhancing key capabilities, will again drive strong returns through the next cycle."

Worth noting, on an underlying basis, the company's operating margins nearly halved from 27.0% to 14.0%.

The forward sales position, including the five weeks following period end, were down by 30% at £1.6bn.

Full-year completions meanwhile were seen reaching at least 9,000, at the top end of its previously guided range, but operating profits were expected to be in line due to "stubborn" build cost inflation.

It was anticipated however that cost inflation running at around 5% would moderate further over the months ahead.

The interim dividend was cut from 106.5p one year before to 34.4p.

Cash at period end stood at approximately £360m, which was down from £780m.