Shares in Persimmon, one of the largest UK housebuilding companies, jumped today after it unveiled a 13% rise in pre-tax profit in the six months to the end of June.
Reporting profit of £516.3 million, against £457.4 million during the first half of last year, the company was rewarded by a Persimmon homes share-price rise of 38.5p, or 1.58%, to 2,482.5p.
Earnings per share were also 13% higher, at 134.9p, against 119.5p in the first half of 2017, and Persimmon recorded that additional “return of surplus capital” worth 125p a share, or £388.5 million in total, was paid out on 29 March in addition to the scheduled 110p a share payment made on 2 July. Totalling £343.8 million.
Good levels of interest
Under the capital return plan, Persimmon is committed to two payments of 125p a share and 110p a share in April and July next year and identical payments in April and July 2020. A final 110p a share will be paid in July 2021, making a total of 1,300p a share returned since the programme began in June 2013.
He added, “We have continued to experience good levels of customer interest in our housing development sites as we trade through the quitter summer season. Customers are continuing to benefit from a competitive mortgage market and confidence remains resilient based on healthy employment trends and low interest rates.
“Our forward sales are 6% ahead of last year at £2.12 billion, which places the group in a strong position for the second half of the year.”
Government policy will help shape market
Sales of new homes during the period increased by 4% to 8,072, from 7,794 during the first half of last year, and the average selling price of a new home was 1% higher than during the same period last year, at £215,813, against £213,262.
Return on capital employed was 53.8% from 47.3%, a 14% increase.
Chairman Roger Devlin said, “The development of government policy and its effect on the UK economy, and the housing market more directly, will play an important role in helping to create future market conditions that will allow the industry to continue to increase the delivery of newly built homes.”
“Growth of new home delivery will stimulate further benefits of increased investment, creation and maintenance of employment in local regions, both directly on development sites and in the supply chain, and increased contributions to communities through taxes paid and improved local infrastructure and amenities.”
He added, “We will maintain strong operational disciplines to ensure we fulfil our strategic objectives, with our operational judgements continuing to reflect our close monitoring of market conditions.”
Persimmon will publish a trading update on 7 November.