Persimmon to re-evaluate final dividend as forward sales rise ahead of last year

As of June 30, 2020, the group said forward sales of new homes were 15% ahead of last year while interim revenues tumbled 32%

Persimmon - Persimmon to re-evaluate final dividend as forward sales rise ahead of last year

Persimmon PLC (LON:PSN) has said it will re-evaluate the payment of a final dividend for the year to December 31 2020, during the second half.

The housebuilder said in an update that it is “encouraged” by the level of customer reservations in the period since sales offices reopened in mid-May, with website enquiries and sales office appointments continuing at “healthy levels”.

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As of June 30, 2020, the group noted that forward sales of new homes were 15% ahead of last year at £1.86bn, with 5,150 new homes placed privately at an average price of £242,400 and another 4,950 sold to the group’s housing association partners at an average price of £123,280.

In the first half, total revenues tumbled 32% to £1.1bn due to the impact of the coronavirus pandemic.

At period-end, the FTSE 100-listed group had £830mln of cash plus deferred land commitments of £120mln to be paid by end-December. It also had an undrawn revolving credit facility of £300mln.

Persimmon said it did not make use of the government’s furlough scheme and has no plans to access state funding.

“Our build programmes had returned to normal levels by period end, and we have seen encouraging sales levels throughout the period, in particular, over the last six weeks when net reservations have been c. 30% ahead year on year,” the housebuilder's chief executive Dave Jenkinson said in the trading statement.

A strong 'buy'

Richard Hunter, head of markets at interactive investor, noted more challenges lie ahead as the coronavirus crisis alongside Brexit could dampen the propensity of consumers to move or buy a new house, while the potential withdrawal of the Help to Buy scheme also threatens future revenues.

However, the stamp duty holiday on properties up to £500,000 announced on Tuesday could brighten prospects as the market returns to normality.

"The coronavirus arrived at a time when Persimmon was grappling with issues of build quality and customer service which were threatening to tarnish the brand, and with these issues largely of its own making, the company found itself having to devote time to amend some of its practices to avoid a rough reputational ride," Hunted commented.

"Persimmon has for the most part risen to the challenges in some style... [it is] well placed to respond to the inevitable and impending economic challenges, with the market consensus of the shares remaining resolute at a strong buy.”

Shares shot up 5% to 2,549p on Thursday morning.

-- Adds analyst comment, shares --

Quick facts: Persimmon

Price: 2472 GBX

Market: LSE
Market Cap: £7.88 billion

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