Persimmon interim profits jump as revenue, prices rise

18th Aug 2015 07:05

(ShareCast News) - Housebuilder Persimmon posted a 31% rise in first-half pre-tax profit on the back of solid revenue growth, continued improvement in operating profitability and a strengthening of the company's financial position.Pre-tax profit for the six months ended 30 June came in at £272.8m, on revenue of £1.33bn, up 11%.Underlying basic earnings per share for the period rose 43% to 78.6p and the underlying operating margin increased 280 basis points from the first half of 2014 to 20.5%.The company said legal completions increased 7% to 6,855 new homes sold from 6,408, while the average selling price was up 4% to £194,378 and current forward sales were 12% ahead of last year at over £1.71bn.Persimmon said it secured 11,539 plots of land, bringing its consented land bank to 92,404 plots.The housebuilder said it will not be paying an interim dividend but it made its third payment of the capital return plan in the half of 95p per share.Chief executive Jeff Fairburn said: "Persimmon has traded well in the first half of 2015. The group continues to take advantage of the current market opportunities to deliver sustainable growth whilst also utilising its excellent cash generation to build a strong asset platform for the future."We have now entered the traditionally slower summer weeks for the market. Our private sale reservation rate since 1 July is currently 5% ahead of the same period last year which is a reflection of the continuation of healthy customer demand."Despite the upbeat results, shares in the company reversed gains to trade lower, after hitting an all-time high in early trade.Numis said the results were "strong" and lifted its pre-tax profit estimates as a result of better-than-expected margin growth. The broker raised its 2015 pre-tax profit forecast to £596.8m from £575m and its 2016 estimate to £647.3m from £638.4m.However, it cut its rating on the stock to 'reduce' from 'hold' saying that while the company does have good income attractions and strong returns, superior value exists elsewhere.Meanwhile, Atif Latif, director of trading at Guardian Stockbrokers, pointed out that even with Tuesday's drop in the share price, Persimmon shares are up 39% year-to-date.He said the stock "is very good value and the dip was to be expected."At 0950 BST, Persimmon shares were down 1.8% to 2,082p.