Bloomberg News

Persimmon First-Half Profit Rises as Sales Mix Improves Margins

August 21, 2012

Persimmon Plc (PSN), the U.K.’s largest homebuilder by market value, increased profit before items by 65 percent in the first half as it sold more family houses to lift margins.

Pretax profit excluding items rose to 98.7 million pounds ($155 million) from 59.7 million pounds a year earlier, the York, England-based company said today in a statement. Revenue rose 13 percent, while net asset value increased by 4 percent to 625.7 pence a share.

Persimmon lifted its operating margin to 12.2 percent of sales from 9 percent a year earlier as it built and sold more family houses on low-cost land acquired during the 2009 recession. Chief Executive Officer Mike Farley is using the cash reserves generated by the company to pledge 1.9 billion pounds of dividend payments through 2021 and to step up land purchases.

Persimmon is the third-best performing stock in the 10- member U.K. Home Builder Index (BNUKHBLD), gaining 50 percent this year. The index has climbed almost 34 percent in the same period, reflecting homebuilders’ efforts to restore profits even as new home completions dropped last year to the lowest during peacetime since 1924.

The British government is seeking to boost housing starts by loosening social housing requirements in planning consents and encouraging investment by housing associations, non-profit residential landlords, the Financial Times reported last week.

Persimmon said home completions rose 6 percent to 4,712 and the average selling price of its properties increased 7 percent to 171,206 pounds.

To contact the reporter on this story: Simon Packard in London at packard@bloomberg.net

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


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