Persimmon unveils 44% jump in profits
UK’s biggest housebuilder brings forward dividend as help-to-buy scheme propels revenues to £2.6bn
Persimmon, the UK's biggest housebuilder, has brought forward its dividend payment after reporting a 44% jump in annual profits.
The company sold 13,509 homes last year, up 17% on 2013, and was upbeat about the outlook for the housing market, despite uncertainty created by the general election in May. Chairman Nicholas Wrigley brushed aside any concerns over a slowdown, saying the economic recovery and the mortgage deals on offer provided a "supportive backdrop for the new homes market".
However, comments from Bank of England policymaker Kristin Forbes, who said higher interest rates may be needed "in the near future", dragged down shares in Persimmon and other UK housebuilders. Persimmon was one of the biggest fallers on the FTSE 100 index, down 3.5% to £16.50.
For now, the sector is booming. Rival Bovis Homes reported a 69% rise in annual profits to £133.5m on Monday, having sold a record 3,635 homes.
Rival housebuilder Redrow reported record first-half profits of £91.2m, up 92%, and doubled its interim dividend a fortnight ago.
About 40% of Persimmon's 2014 sales exploited the government's help-to-buy scheme aimed at first-time buyers. Revenues climbed 23% to £2.6bn, propelling underlying profits before tax to £475m, ahead of City forecasts.
Persimmon chief executive, Jeff Fairburn, said the company had generated so much cash it would pay out 95p a share to investors in April rather than July. This is part of a pledge to return £1.9bn (£6.20 a share) to shareholders over nine-and-a-half years.
Persimmon said it had a "solid opening period" to the 2015 spring season, underpinned by low cancellation levels and the reduction of stamp duty on house purchases for the majority of homebuyers in December's autumn statement. Forward sales, of £1.49m, are 5% up on last year.
Persimmon has opened 60 of the 120 new sites planned for the first half of this year and aims to have construction under way at 400 sites by the end of June. It has been hiring ex-military personnel to train as bricklayers and joiners amid severe skill shortages in the industry.