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York housebuilder outperforms expectations with £222 million profit
PERSIMMON has increased profits and outperformed its expectations as it embarks on a new long term strategy.
The York-based housebuilder increased pre-tax profit to £221.8 million in the year ended December 31, up from £147.2 million in 2011.
Revenue was up 12 per cent to £1.72 billion and the business opened 125 new sites throughout the year.
Nicholas Wrigley, group chairman, said: "These strong results mark the completion of the first year of our new strategy and I'm pleased that at this early stage we are ahead of plan.
"Persimmon has made excellent progress throughout the year increasing underlying pre-tax profitability by 52 per cent, growing operating margins strongly to 13 per cent and generating £179 million of free cash flow before dividends. We continue to see good value in the land market and acquired about 14,800 plots during the year, 38 per cent of which were converted from our own strategic land bank.
"We have made a strong start to the new year, with forward sales reaching the £1 billion milestone, an increase of 9 per cent on last year. Mortgage availability remains the key constraint to the housing market. However, there are some signs that lenders are embracing the Government's Funding for Lending scheme and we have seen some recent reductions in mortgage rates. We anticipate increasing our active outlet number to around 390 sites by the end of June, helping to increase the volume of new homes that the country needs."
The growth in the company's profitability was driven by the opening of new sites and continued focus on operational improvement which resulted in strong control over build costs, it said.
Mike Farley, group chief executive, said they welcomed Government initiatives, FirstBuy and NewBuy, which supported customers to buy homes. He said: "The Government's £80 billion Funding for Lending scheme should also support an increase in mortgage lending at more attractive interest rates."
Although the scheme got off to a slow start at the end of 2012, he said: "We anticipate this scheme will support a further gradual improvement in the mortgage market through 2013, mitigating to some extent the impact of the continuing uncertain economic conditions."
The business will pay a dividend of 75p per share on June 28 as the first payment in its long term capital plan to return £1.9 billion to shareholders by 2021.