UK house builder Persimmon plc (LSE: PSN) released its third quarter Interim Management Statement for the period from July to 16 November 2009. According to Persimmon the company ‘remains strong’ after a period in which the group’s sales and debt position is ahead of expectations.
The period has seen home sales ‘well ahead of last year’, following an ‘encouraging’ sales performance though the summer and autumn months. Persimmon expect to legally complete approximately 9,000 homes for the whole year ending 31 December 2009.
Furthermore Persimmon said it expects to carry forward a healthy order book into 2010, according to the UK’s largest house builder it is currently fully sold up for 2009 and is 50% ahead of last year in terms of forward sales, Persimmon has a further £500 million of sales already taken for 2010.
The house builder said that it continues to keep close control of cash generation. Based on financial comparatives Persimmon stated that it expects borrowings at year end ‘to be significantly lower’ than previous guidance of £400 million. During the period, the group’s debt continued to reduce and as at 31st October total borrowings were ahead of expectations at £399 million which represents an improvement of almost £600m from 2008.
Despite the improving sales performance, Persimmon says it still has significant concerns regarding the availability of mortgages. The house builder has particular concerns over the limited availability of higher loan to value products required by first time buyers.
The company has been actively participating in the Government HomeBuy Direct Scheme. The scheme provides government sponsored financing for first time buyers and key workers in order to raise sufficient deposits for new build homes. Under the Government’s HomeBuy Direct Scheme, Persimmon recently reserved its 1,000th sale the scheme’s launch in March this year.
The management statement summarised the group’s outlook going forward: “Whilst we remain concerned about the potential impact on our markets of any significant increase in unemployment over the coming months, debt is reducing well ahead of our previous guidance, sales volumes have stabilised and pricing conditions are currently more positive. Having strengthened our forward order book and reduced borrowings significantly, the Group's financial position remains strong.”