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Persimmon anticipates full year pre-tax profits “modestly ahead of market consensus”

The housebuilder said legal completion volumes in 2017 were strongly ahead, up 6%, or by 872 new homes at 16,043, while its average selling price increased by 3% to around £213,300, up from £206,765 in 2016
Persimmon homes
Persimmon said second half legal completion volumes of 8,249 were 455 homes, or 6% stronger than for the first half of the year

Persimmon PLC (LON:PSN) said it anticipates its full year pre-tax profits “will be modestly ahead of market consensus” as it reported a 9% jump in 2017 revenues to £3.42bn.

In a trading update, the FTSE 100-listed housebuilder said legal completion volumes in 2017 were strongly ahead, up 6%, or by 872 new homes at 16,043, while its average selling price increased by 3% to around £213,300, up from £206,765 in 2016.

READ: Persimmon shares fall as it reports flat third quarter sales

The group said: “We continued to experience healthy customer demand for new homes through the autumn sales season and the value of our forward sales at 31 December 2017 of c. £1,355mln was 10% ahead of the prior year (2016: £1,234mln).”

Persimmon said second half legal completion volumes of 8,249 were 455 homes, or 6% stronger than for the first half of the year.

The group said it successfully opened 197 new sales outlets during the year and is building on all sites which have an implementable planning consent.

The firm now has 375 active sales outlets and has acquired around 17,300 plots of new land at excellent margins in over 80 locations throughout the UK during the year.

It said it continues to perform strongly in generating free cash, with held cash balances of around £1.3bn as at 31 December 2017, up from £913mln at the same stage in 2016.

Persimmon concluded: “We remain mindful of market risks including those associated with the uncertainty arising from the UK leaving the EU. However, we are keen to deliver further improvement in our housing output and remain ready to invest wherever the local planning environment is supportive.”

READ: Persimmon delivers first half profit growth despite Brexit and UK general election uncertainty

The group said it announce results for the year ended 31 December 2017 on Tuesday 27 February 2018.

In a note to clients, analysts at Liberum Capital said: “The main point from the update was that reservation rates were ahead of last year in the second half, suggesting continued resilience of demand for new homes.

“This bodes well for trading updates expected from the rest of the sector. We continue to see better value in smaller, growing housebuilders, with top picks: Bellway, Galliford Try, MJ Gleeson* and Redrow.”

In early trading, Persimmon shares edged up 0.3%, or 9p at 2,757p.

 -- Adds broker comment, share price --

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