Builders' Merchants News

Persimmon reports sales and dividend rise

Published:  24 August, 2011

YORK: Britain's second-largest house builder Persimmon has seen a bounce back in summer sales, driven by the north, after a dip in the first half of the year. Shares climbed 3.4% to 396p, as it cheered investors by raising its dividend to 4p from 3p.

"The sales momentum in the northern business has been maintained - normally we see a slowdown in the summer months," said Mike Farley, the chief executive. "We have seen some slowdown in the south and central [England]," after the south saw better sales rates in the first half.

"We need to see what happens in the autumn period when a pick-up usually takes place." The autumn selling season should kick off from the second week in September.

"We're not getting carried away, but the market is stable which is down to mortgage availability. Mortgage rates are very low, and low interest rates will be here for a while. We don't see problems with affordability, it's that lack of deposit." But he noted that the average loan-to-value ratio [LTV] is 80%, against 75% a year ago, which means there are more deals that require smaller deposits from buyers.

The house builder, whose brands include Charles Church and Westbury, said sales had climbed 4% over the last eight weeks while its order book worth £1bn is 10% ahead of last year. This comes after a 5% dip in the first six months of the year, when Persimmon completed 4,439 homes, compared with 4,657 a year ago. It expects sales volumes to be flat over the year as a whole. The group made an underlying profit before tax of £59.7m in the first half, up 52%.