Housebuilder Persimmon hails strong demand for new homes despite pandemic
Persimmon, the housebuilding giant, is “well prepared” for lockdown after hailing resilient demand for new homes.
The UK group, which is one of the biggest players in the Scottish market, said it saw a strong performance in the third quarter, with average weekly sales rates up 38 per cent on 2019, and is set for a “good” result for the year.
The Charles Church owner said it is fully sold up for the current year and has some £1.36 billion of forward sales reserved beyond 2020 – up 43 per cent on a year earlier.
It told investors that its market share has started easing back to “more normal levels” in recent weeks as activity has recovered across the wider housebuilding industry since the spring lockdown. But it said it expects completed sales in the second half to be at least in line with a year earlier.
Building sites and sales offices are continuing to operate throughout the second English lockdown, though the firm added a note of caution amid potential further measures to control the pandemic and economic uncertainty.
Richard Hunter, head of markets at Interactive Investor, noted: “Persimmon is playing the hand which it has been dealt prudently and profitably.
“Operationally, the current lockdown has a limited impact on the company, with sales offices and manufacturing facilities remaining open, as opposed to the March version where sites ground to a halt.
“Notwithstanding the potential difficulties of the coming months, the company is well positioned and the market consensus of the shares as a strong buy reflects the high regard in which the company is generally held by investors.”
Persimmon declared another interim dividend payout to investors of 70p a share, on top of the 40p a share paid out in September. Together, the payouts replace the 110p final divi for 2019 that was postponed at the beginning of the crisis.
Recently appointed chief executive Dean Finch said: “Persimmon continues to perform robustly despite the significant challenges presented by the Covid-19 pandemic and we are currently on course to deliver a good result for 2020.”
The group added: “We are well prepared for this second lockdown and continue to work with our subcontractors and supply chain to maintain the group’s operations.
“We remain mindful, however, of the potential for further disruption from additional government-mandated measures to control the pandemic and the impact of ongoing uncertainty on the UK economy.”
Steve Clayton, fund manager of the HL Select UK Income Shares fund, which has a position in Persimmon said: “This is a confident statement by Persimmon.
“The company spent the first lockdown wisely, getting its business Covid-safe so that it could swiftly reopen and now it is able to carry on trading through the second lockdown. And customers have come flocking, with sales rates per site 38 per cent ahead of the same period last year.
“Crucially, the cash has come rolling in as the company has converted its well-bought land into completed house sales.
“We see Persimmon as well placed to keep paying dividends; earlier generous capital return programmes were put on hold when everyone had to down tools back in the spring.”
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