Persimmon hoists sales and margins in Q3, but Help to Buy 'muted'

6th Nov 2013 07:03

- Profits improved with margins up over 300bps yoy- Help to Buy muted since October- No news on cash distributionHousebuider Persimmon has seen sales and profits improve in the third quarter but said the impact of the Help to Buy scheme had been 'muted' since October due to slow reactions from mortgage lenders.The FTSE 100 company said it expected mortgage providers to lower their interest rates as Help to Buy attracted more lenders into the market over coming weeks and months and that sales supported by these guaranteed mortgages would consequently improve. Nonetheless the group said sales activity had continued to be buoyant with "firm" prices and it was fully sold up for the current year, with visitor numbers up and cancellations down. Operating profits continued to improve thanks to tight control on build costs and overheads lifting underlying operating margin more than 300 basis points faster than it expected to 15.1%.The company said its was "confident of achieving further progress in the second half of the year" and added it had recorded £650m of forward sales booked beyond the current year, up 41% on an admittedly slower 2012.Furthermore, Persimmon increased build rates using its 'flat-pack' timber-framed prefabricated housing, or "second-generation closed-panel timber-frame" houses, with output expected to increase by 25% from its highly efficient Space4 timber-frame factory. Using these frames, builders can assemble the exterior of an average 1,200 square foot new home in one day, which cuts total building time from 12-14 weeks to 8-10 weeks.Cash flow is higher than spending so the coffers are expected to have swelled from the £48.1m in the bank at June 30th, but there was no detail on cash distributions than some analysts were hoping.OH