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UPDATE 1-Builder Persimmon says sales stay strong after 57 pct profit rise
August 19, 2014 / 10:05 AM / 3 years ago

UPDATE 1-Builder Persimmon says sales stay strong after 57 pct profit rise

* H1 underlying pretax up 57 pct at 212.9 mln stg

* Sells 6,408 new homes, up 28 percent on year before

* Forward sales up 22 pct at 1.5 bln stg

* Shares up 0.5 pct after early jump to five-month high (Adds CEO comments, analyst reaction, shares)

By Paul Sandle

LONDON, Aug 19 (Reuters) - British housebuilder Persimmon Plc posted a 57 percent profit rise and said it was trading ahead of last year in the traditionally slower summer period, having seen little evidence so far of a recently flagged slowdown in the housing market.

Its shares jumped to a five-month high before giving up most of the gains to trade up 0.5 percent at 1,342 pence by 0853 GMT.

Persimmon, whose lime green logo sprouts from some 400 developments across Britain, is among major housebuilders to have benefited from government schemes such as “Help to Buy”, which enables buyers with small deposits to get a mortgage.

Chief Executive Jeff Fairburn said the group had worked hard to increase volume to meet demand, encouraged by government measures to underpin the housing market and help stimulate broader economic growth.

Persimmon sold 6,408 new homes in the six months to end-June, up 28 percent on the year before and reflecting the same trend as benefited rival Bovis Homes Group Plc, which on Monday posted a 150 profit jump thanks to a record number of completions.

Help to Buy, under which the government offers a guarantee for any mortgage borrowing above 80 percent of a property’s value up to a maximum 95 percent, along with the growing availability of mortgage financing, have been instrumental in the market’s upturn.

Property prices recorded their biggest annual rise last month since the start of the financial crisis, according to mortgage lender Halifax (part of Lloyds Banking Group Plc ).

However, there are signs that rises might be starting to moderate, with a survey on Monday showing asking prices falling in August at the sharpest rate on record for that month.


Fairburn said Persimmon was seeing a “little bit more seasonality” but visitor levels to its sites this year were still up about 6 percent on the year before.

“We are pleased with the rate we are seeing,” he said. “We have good forward sales (of properties reserved or bought but not yet completed), up 22 percent at 1.5 billion pounds, which gives us good visibility to press on with the build.”

Sales reservations in the traditionally slower summer months were ahead of last year, up 9 percent in the period since July 9, he added.

Persimmon, which flagged last month that revenue had risen by a third to 1.2 billion pounds ($2 billion), reported a first-half underlying pretax profit of 212.9 million pounds.

Analyst Clyde Lewis at brokerage Peel Hunt, who has a “hold” rating on the stock with a price target of 1,455 pence, said Persimmon had made excellent progress in the first half.

“Recent trading has held up well, despite tougher comps,” he said, referring to comparisons with last year’s numbers. “Management expects to see first-half volumes account for 48 percent of full-year figures; this implies a small upgrade to our estimates, along with a slight tickle on our ASP (average selling price) assumption.”

The builder is predicted to post a full-year pretax profit of 439.2 million pounds, according to a Thomson Reuters poll of 15 analysts, up on a 2013 profit of 329.6 million. ($1 = 0.5986 British Pounds) (Additional reporting by Costas Pitas; Editing by Karolin Schaps and David Holmes)

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