Housebuilder Persimmon PLC (LON:PSN) said on Tuesday it is in a strong position for the second half after delivering a 13% increase in first-half profits.
In the first six months of the year, profit before tax gained 13% to £516.3mln and revenue grew 5% to £1.8bn as new home sales rose 4% to 8,072 units and the average selling price edged up 1% to £215,813.
The underlying new housing margin increased by 210 basis points to 29.7% after focusing on purchasing high quality land, starting on new sites as soon as possible and keeping a tight control on costs.
Persimmon acquired 11,072 new plots of land across 45 sites during the period, for £343mln, compared to £369mln last year.
Forward sales ahead of last year
Chief executive Jeff Fairburn said forward sales are 6% ahead of last year at £2.12bn, putting the company in a good position for the second half. The company has 6,528 new homes sold forward into the private sale market at average selling price of. £235,800.
“The group has a robust platform to continue to deliver successful outcomes based on its high quality land bank, strong forward sales, excellent financial position, and experienced management team,” Fairburn said.
“We believe we are well positioned to deliver further high quality, sustainable growth."
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Persimmon said the conditions in the housing market continue to be supported by strong employment levels, low interest rates and a competitive mortgage market.
The group reaffirmed its commitment to return surplus capital of at least 235p per share to shareholders each year for the next two years ending 2020, and 110p in 2021. It paid 125p per share to shareholders in March and 110p in July.
Shares rose 1% to 2,440p in morning trading.
'Future not looking quite as rosy as recent past'
"This is a pretty healthy set of results by anyone’s standards, but clearly presents a backward look at performance," said Laith Khalaf, senior analyst at Hargreaves Lansdown.
"The future is not looking quite as rosy as the recent past however, with house price growth moderating and sales not as buoyant as they were.
He added that a further worry is the government's Help to Buy scheme, which has been a lynchpin in the UK housing market.
"While this still has three years left to run, all eyes will be on the Budget this autumn to see if the Chancellor intends to extend the scheme in some way."