PERSIMMON has said it is continuing to see increasing demand for new homes across central Scotland as it reported wider forward sales up about nine per cent on pre-pandemic levels and a jump in first-half profits.
The housebuilder hailed a “robust” performance over the first half of the year as profits were buoyed by a surge in activity in the housing market, but also flagged supply chain pressures connected to Brexit, describing “residual risk” linked to the United Kingdom’s exit from European Union as being high.
The FTSE 100 firm revealed that pre-tax profits increased by 64% to £480.1 million for the six months to June 30. It added that its average private sales rate was around 30% higher than the same period a year earlier, when trading had been impacted from site shutdowns during the pandemic.
In Scotland, it said it has a raft of new sales outlets opening before the end of the year.
A Persimmon spokesman said: “We continue to see increasing demand for new homes across central Scotland and we are actively investing in new land opportunities, with eight new sales outlets opening before the end of the year at East Calder, West Calder, Carnoustie, Clelland, Kirkintilloch, Stevenson, Markinch and Kinross.”
Persimmon said it anticipates achieving about10% growth in sale completions for the whole of 2021.
The company said it also expects the fundamentals of the UK housing market to remain positive amid “improving consumer confidence, low interest rates, and mortgage lenders that are keen to support customers to buy a home of their own”.
READ MORE: Housebuilder sells out across Scotland at ‘several’ sites
It said that around 50% of agreements with owner-occupiers were with first time buyers, many of whom have been boosted by increased savings during the pandemic.
Persimmon also hailed forward sales for around 6,500 homes to private homeowners, at an average selling price of approximately £253,000.
However, the housebuilder said it has “experienced increased cost inflation related to certain components of our supply chain”.
Persimmon said: “Whilst the completion of the free trade agreement between the UK and the EU has relieved some immediate concerns, including regarding increased customs duties on supplies imported from the EU, the broader impact of these new trade arrangements has yet to be seen.
“The new arrangements may lead to increased economic uncertainty adversely impacting: consumer confidence, demand and pricing for new homes, revenues, margins, profits and cash flows and may result in the impairment of asset values.
“The new trade arrangements may result in delays impacting the availability and cost of imported materials and components within our supply chain.”
It added: “We continue to monitor the political situation, the UK economy and the housing market through the review of external information and changes in the behaviour of our customer base.
“We routinely engage with our key suppliers and are currently working closely with them to ensure that our supply chain is not materially impacted.”
John Moore, senior investment manager at Brewin Dolphin, said: “Housebuilding is among the top sectors contributing to the return of dividends, but with around half of its homes sold to first-time buyers and nervousness about the price of land and raw materials, there are potential challenges on the horizon.”
He added: “Nevertheless, Persimmon’s £1.32 billion cash pile – around 15% of its market value – and industry-leading operating metrics offer the company the ability to navigate any such challenges better than most.”
Oli Creasey, property research analyst at Quilter Cheviot said Persimmon “delivered half year results in-line with expectations”, but added: “It could be argued that in some ways the company is actually ahead of its position in 2019 and has recovered from the pandemic.” He said “cost inflation remains notable, but is not currently a concern, with sales prices increasing in-line with these costs at present”. Persimmon shares closed up 42p, or 1.46%, at 2,910p.
For all the latest business News Click Here
