Persimmon upbeat after strong year

Persimmon remained confident for the current year on Wednesday, despite rising interest rates, after strong demand boosted annual sales.

The blue chip housebuilder said total group revenues in the year to 31 December were £3.61bn, up from £3.33bn a year previously, while underlying pre-tax profits were £973.0m compared to £863.1m in 2020. Pre-tax profits rose from £783.8m to £966.8m.

A total of 14,551 new homes were completed, against 13,575 in 2020, with the average selling price improving to £237,078 from £230,534 in 2020. It also added over 20,750 plots of land to its development pipeline.

Persimmon attributed the solid performance to "strong customer demand, good mortgage availability and low interest rates".

Looking to the current year, Persimmon said forward sales were "robust" at £2.21bn, while there had been a near 2% increase year-on-year in the average private weekly sales rate during the first eight weeks.

In February, the Bank of England looked to tackle surging inflation by putting up interest rates for the second consecutive time. With inflation not expected to peak until April, when the BoE forecasts it will reach 7.25%, and the escalating crisis in Ukraine, further rate hikes are expected this year.

Alongside a cost of living squeeze, housebuilders are also facing steep cost price inflation due to labour shortages and supply chain constraints.

However, chief executive Dean Finch said: "The new year’s trading has started well, with private sales rates ahead by around 2% and a robust forward sales position.

"We expect to grow our outlet position in 2022 and are targeting volume growth of 4-7% on 2021 levels, while maintaining our industry-leading margins, although we are mindful of the growing risk of an economic impact as a result of the tragic conflict in Ukraine."

Persimmon added that increases in selling prices are expected to mitigate build cost inflation during 2021.