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Housebuilder Persimmon sees profits slightly higher than expectations

Housebuilder Persimmon expects half-year profits to be “modestly” higher than expectations, despite rising energy and raw materials prices and wage increases.

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Persimmon has its West Midlands office in Telford

Weekly sales for the first half of the year were up one per cent on 2021, driven by strong demand, but house deliveries were slightly lower than expected due to planning delays and labour shortages.

Revenues fell to £1.69 billion from £1.84bn, while group forward sales were around £1.87bn, compared with £1.82bn a year earlier.

Persimmon had 8,800 homes in its forward order book at June 30, down from 9,550, and was around 75 per cent forward sold for the full year. The average selling price of new homes forward sold to owner occupiers was £280,700, up 12 per cent.

The group, which has its regional office in Telford and is building homes across the West Midlands, delivered 6,652 new homes in the first half, down from 7,406, impacted by “further delays in the planning system and material and labour shortages”.

House price inflation was continuing to offset building cost increases, the company added.

“As a result, we expect to deliver a housing gross margin that is slightly ahead year on year,” Persimmon said.

“Rising energy prices, supply constraints on certain materials and increased labour costs are driving upward pressure on total build costs. Despite this, we anticipate the group's profit at the half year to be modestly above our expectations.”

Dean Finch, chief executive, added: “I am pleased we have further enhanced our build quality in the period while also driving build efficiency to historical highs and increasing housing gross margin. We continued to complement this progress with high quality, disciplined investments in land driving growth in our outlet position.

"We have delivered this despite the significant on-going challenges being faced by the industry. As we rebuild our outlet position, delays in the planning system, disruption in material supply chains and challenges in securing labour have impacted completions in the period. We anticipate, however, profit at the half year to be modestly above our expectations reflecting strong demand and positive pricing conditions. Our forward sales position is robust.

“Our disciplined investment is further enhancing our strong land holdings which alongside our rigorous focus on margins is underpinning our continued financial strength. We are expanding our unique vertical integration capabilities to provide further supply resilience and cost efficiency."

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