Persimmon enjoys strong finish to year - UPDATE

8th Jan 2014 07:03

- Annual volumes up 16 per cent, prices up four per cent- Revenues up 21 per cent, 'strong' PBT growth- Expects further improvement in operating marginsAfter boasting of a strong finish to the year, FTSE 100 housebuilder Persimmon confirmed a major rise in 2013 revenues and sees further margin gains to be had. Revenues rose 21% to £2.1bn as volume growth accelerated in the second half to lift the yearly sales volume rise to 16%.The value of forward sales continued to be robust through the end of the year, 41% ahead of the prior year, and rising to 55% for reserved and exchanged private sales carried forward into 2014.The average selling price rose 4% to £180,900 but said this was due to sales mix and that overall the group viewed house prices as stable.Persimmon, which will announce results on February 25th, said the growth in revenues and the "anticipated further improvement in operating margins" would enable it to deliver strong underlying pre-tax profit growth for the calendar year.The volume gains were in part thanks to having increased construction rates swiftly in response to the strong market.Around 17,600 plots of new land were acquired during the year, 5,500 from its margin-boosting land bank, representing a replacement rate of 153% of current consumption, that the company said demonstrated its "appetite" to invest in further growth.Of its land bank, Persimmon was particularly bullish: "The superior returns from these strategic land parcels will support group profitability and cashflows as they are developed over future years."The land market in its regional operating areas continues to offer attractive investment opportunities with roughly 10,100 plots acquired in the second half of 2013.There was £204m cash in the coffers at year end, ahead of targets.Broker Jefferies was impressed, given the land spend and payment of a 75p special dividend (DPS) last June. After speaking to the company analyst Anthony Codling said: "We sense that the next major DPS may come sooner than currently planned in the capital return schedule. Perhaps the 10p planned in full-year-2014 becomes 75p. Management would not be drawn, but we look forward with interest to see the size of the dividend, which may be announced along with the full-year results on February 25th."He acknowledged some risks in his view: "that volume growth may impact value generation" and, eyeing the Help to Buy scheme, that the group may work the "gold egg laying goose so hard that its health deteriorates". Codling added: "Persimmon was the first UK housebuilder to report in 2014 and it set the scene for another year of threefold growth: of volumes, selling prices and operating margins. It is likely, in our view, that Q1 2014 will be a strong quarter for the UK housebuilding sector."Jefferies profit estimates are upgraded 8% for 2013, by 6% for 2014 and 4% for 2015, with its 'hold' retained and target price hiked by 3% to 1310p. Persimmon shares were up 0.43% by 13:50 on Wednesday.OH