Profits give housebuilder Persimmon green light to re-start building

Mar 3 2010 by Karen Dent, The Journal

HOUSEBUILDER Persimmon has reversed its losses to return to profit and plans to start work at 90 new sites this year.

The York-based builder, which was set up in 1972 by Northumberland landowner Duncan Davidson, posted annual pre-tax profits of £77.8m for the year to the end of December 2009.

Twelve months earlier, the company was £780m in the red when the bottom fell out of the housing market and lower valuations resulted in a string of write-downs.

The new results included a £74.8m write-up but even without that, it made a £3m profit.

Chairman John White said: “Persimmon has performed well throughout a period of difficult trading conditions. Over the last 12 months we have concentrated heavily on cash generation and cost control.

“This focus and the action we took during 2008 to restructure our business in light of the medium term outlook, has ensured that we remain strong and competitive. The business is well positioned both operationally and financially for a recovering market.”

Persimmon, which operates as the Persimmon Homes, Charles Church and Westbury Partnerships brands, said house sales jumped 7% since the start of this year and visitor numbers were “steadily increasing”.

Chief executive Mike Farley said: “I think the year has started well for us - on the one hand the housing market itself is performing well, but we must be affected by the wider economic recovery as a whole.”

Persimmon reduced its debt to £267.5m from £600.7m at the end of 2008 and opened 40 new sites in the first half of last year and 50 in the final six months, supported by Government grants to build affordable homes.

It plans to add 90 sites to the 370 it currently operates, which is 12% fewer than the year before.

City analysts were impressed by yesterday’s results. Rachael Waring from Panmure Gordon stockbrokers said the figures suggested this year’s pre-tax profits forecast would rise to £75m from £13m.

Persimmon’s recovery echoes that of fellow North East builders Barratt and Bellway. Barratt announced plans for 550 new homes in the North East last month and Bellway said its sales rose by 10% in the six months to January this year.