Bloomberg News

Persimmon Revenue Gains 13% as Average Home Price Increases

July 03, 2012

Persimmon Plc (PSN), the U.K.’s largest homebuilder by market value, said first-half revenue climbed about 13 percent as the company sold a greater proportion of family houses, raising the average price of its homes.

Revenue increased to about 805 million pounds ($1.3 billion), the York, England-based company said today in a statement. Persimmon completed 4,712 homes compared with 4,439 a year earlier and the average price was about 7 percent higher at 171,400 pounds.

U.K. homebuilders have boosted revenue and share prices amid tight mortgage lending and stagnating property values after reducing sales volume and increasing margins. Persimmon has gained 30 percent in London trading in the last 12 months, the most in the Bloomberg EMEA Homebuilders Index, which rose 14 percent.

“We’re seeing the must-move people,” Chief Executive Officer Mike Farley said in an interview. “There is that underlying hardcore number of people who need to move or need to acquire their first house. You’ve got to live somewhere.”

Persimmon gained as much as 1.9 percent to 647 pence, the highest in more than two months. The shares were up 1.6 percent at 645 pence at 8:56 a.m., giving the homebuilder a market value of almost 2 billion pounds.

Below Capacity

Persimmon expects an underlying operating margin of more than 11.5 percent compared with 9 percent a year ago. Though the company has the capacity to build around 14,000 homes annually, it plans to construct fewer than 10,000 because of restricted lending, Farley said.

“The drag on the market is the lack of affordable mortgages,” he said in the interview. “Until that issue is fully resolved, the industry will be constrained on its volumes.”

Britons repaid more mortgage debt than they borrowed in May for the first time in at least 15 years as consumers sought to improve their finances, the British Bankers’ Association said June 27.

House prices in the U.K. stopped rising in June for the first time in four months as economic uncertainty and a seasonal slowdown weighed on the market. Farley and executives at rivals Barratt Developments Plc (BDEV) and Berkeley Group Plc said the London 2012 Olympics may stifle home purchases in the next quarter. The competition starts July 27 and the Paralympics finishes on Sept. 9.

To contact the reporter on this story: Chris Spillane in London at cspillane3@bloomberg.net.

To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.net.


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