Persimmon ready to build ‘more than 100,000 homes’

PersimmonPersimmon has demonstrated a positive outlook for the property market after it reported a 44 per cent rise in full-year profit.

The firm has increased its land holdings in 2014 to 17,000 acres, on which it said it can build over 100,000 homes.

Chief executive Jeff Fairburn said the group’s strong cash generation meant it would now pay out 95 pence a share to investors in April rather than July. The payment is part of a long-term plan to return 6.20 pounds per share of surplus capital to shareholders in a nine and a half year period.

However, shares in Persimmon were down 4.4 per cent at 1,635 pence at 0927 GMT, the biggest fall in the FTSE 100 index.

Persimmon posted underlying pre-tax profit of £475 million, broadly in line with market expectations, on revenue up 23 per cent to £2.6 billion.

Fairburn said 2015 had started well, with current total forward sales running 5 per cent ahead of last year and more people visiting its sites.

“At this point of time we are pretty confident, but we are in the strong Spring selling period so you would expect good demand at this stage,” he said in an interview.

“But (…) we’ve got the lead into the election, which may see some fall back in terms of the sales rate, and then it will pick up in the second half,” he added, referring to national elections in May.

He said Persimmon would complete a similar, or slightly higher, volume of home sales this year as last. The builder has increased its volumes by 36 per cent over the last two years.

On the level of cash return, Fairburn said he needed to strike a balance between returning surplus cash and retaining funds for land acquisitions.

“We will continue to review it as we go forward in line with how we see the market,” he said.

Nicholas Wrigley, Persimmon chairman, added: “Persimmon delivered a strong and well balanced performance in 2014.

“We have undertaken disciplined investment to support sustainable growth in volume, increasing the number of completions by 17 per cent in the year, bringing the increase in the number of new Persimmon homes completed over the last two years to 36 per cent.

“We have had an encouraging start to 2015 and experienced a solid opening period to the spring season with current total forward sales of £1,490m, 5 per cent ahead of the previous year. Despite some uncertainty arising from the general election in May, the ongoing gradual improvement in the UK economy and increasing mortgage lender support provides a supportive backdrop for the new homes market.”

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