Persimmon profit jumps, returns cash to shareholders

Published 28th Feb 2012

Housebuilder Persimmon posted a slightly stronger than expected jump in full-year profit on Tuesday and said it would return 1.9 billion pounds of surplus cash to shareholders.

The York-based company said it would return the cash through dividends over nine-and-a-half years, starting in 2013, and remain largely debt-free throughout the period.

The company is still investing in growth, however. It added 14,300 plots to its landbank during 2011, taking the total to 63,300, representing 6.5 years of supply. At the same time it managed to end the year with a net cash position of 41 million pounds having reported net borrowings of 51 million a year earlier.

Persimmon is proposing a 10 pence total dividend for 2011, 33 percent higher than the year before.

Britain's largest housebuilder by market value reported a 55 percent rise in underlying pretax profit to 148.1 million pounds, beating a consensus forecast of 142 million pounds based on a Thomson Reuters I/B/E/S poll of 14 analysts.

"Persimmon's successful strategy of improving operating margins, investing in high quality land and generating surplus cash to pay down debt proved highly effective, despite difficult prevailing housing market conditions," chairman Nicholas Wrigley said in a statement.

"Visitor levels and reservations continue on an improving trend and, although we expect the UK housing market to remain difficult, Persimmon is in a strong position to meet this challenge."

The company said visitor numbers to its developments were 10 percent higher in the first eight weeks of 2012 than in 2011 and forward sales revenue is 9.4 percent higher than last year at around 927 million pounds.

Persimmon said it would continue to pursue its strategy of acquiring high margin land and increasing sales volumes.

The York-based housebuilder's average selling price fell 2 percent to 166,142 pounds because the firm sold more starter homes for first-time buyers, who were tempted back to the market through the government's FirstBuy shared equity scheme.

A fresh initiative, NewBuy, should further increase the number of first-time buyers when it launches, most likely in March, the company said.

Persimmon, which is seen as a bellwether of the housebuilding sector, echoed other housebuilders including Barratt and Bovis Homes with its profit jump and relatively upbeat outlook.

Source: ' Reuters '

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