Government and bank policies boost Persimmon as it enters 2021

Persimmon has kicked off 2021 on a better footing than last year as Government and Bank of England policies helped boost the housebuilder.


              
File photo dated 24/11/05 of Persimmon flags on a new housing development. The chairman of Persimmon has apologised "unreservedly" to shareholders over the housebuilder's handling of executive pay. PRESS ASSOCIATION Photo. Issue date: Wednesday April 25, 2018. Nigel Mill, chairman on an interim basis, said at the company's annual general meeting that the debacle was a matter of "profound regret". It comes after boss Jeff Fairburn's pay packet sparked outrage among politicians and shareholders. See PA story CITY Persimmon. Photo credit should read: Chris Radburn/PA Wire
File photo dated 24/11/05 of Persimmon flags on a new housing development. The chairman of Persimmon has apologised "unreservedly" to shareholders over the housebuilder's handling of executive pay. PRESS ASSOCIATION Photo. Issue date: Wednesday April 25, 2018. Nigel Mill, chairman on an interim basis, said at the company's annual general meeting that the debacle was a matter of "profound regret". It comes after boss Jeff Fairburn's pay packet sparked outrage among politicians and shareholders. See PA story CITY Persimmon. Photo credit should read: Chris Radburn/PA Wire

The firm, which has its West Midlands office in Wolverhampton, revealed that pre-tax profits were down by a quarter to £783.8 million in 2020, and said its average private weekly sales rates so far are seven per cent above last year's levels.

Meanwhile, forward sales are at £2.3 billion, up 15 per cent year on year, due to low interest rates, the availability of mortgages and Government support.

The Bank of England's base rate was slashed to a record-low 0.1 per cent last year in response to the pandemic.

This filtered through to the interest rates being offered by high street banks, making home loans cheaper.

Persimmon also benefited from the Covid-19 stamp duty holiday, which has seen thousands of pounds of tax burden lifted from house-buyers.

Changes to the Help to Buy scheme for first-time buyers could also benefit the firm, said Dan Lane, an analyst at Freetrade.

"Persimmon has been a huge beneficiary of the Help to Buy scheme and, judging by the Chancellor's plans today, it plans to keep riding the Government support wave," he said.

He added: "There's the potential for public outcry in all of this though. These Government schemes may have got young people in particular on to the property ladder but they didn't do it by actually tackling inflated prices.

"Help to Buy ultimately boosted the bottom line of Persimmon and co by letting them factor in Government subsidies and build in their profit margins on houses."

But while the future might look brighter, on Wednesday morning Persimmon revealed a bruising set of financial results for last year.

Profit fell by 25 per cent, while the number of new homes that it built dropped by almost 2,300 to 13,575. Revenue, meanwhile, dropped nine per cent to £3.33bn.

Shareholders were made to feel the pain, with the level of dividend paid out last year more than halving from 235p to 110p.

"Persimmon delivered a robust performance in 2020 despite the challenges presented by the pandemic," said chief executive Dean Finch.

Sorry, we are not accepting comments on this article.

Top Stories

More from the Express & Star

UK & International News