Persimmon raises rebound hopes with strong forward sales

Persimmon has raised hopes for a rapid recovery for homebuilding, reporting a quicker than expected rebound in sales and construction levels.

The UK’s largest housebuilder by market value said on Thursday that revenues fell by a third to £1.19bn in the first six months of 2020 compared with the same period last year, as coronavirus halted construction and sales.

But forward sales are up 15 per cent at £1.86bn and activity on building sites has returned to normal levels, said the company.

Persimmon has returned to full site capacity ahead of some its largest rivals because it opted for “self-help” rather than government support, according to Dave Jenkinson, the company’s outgoing chief executive.

“From the very start Persimmon said they wouldn’t take advantage of any government support: furlough or grants. That gave us a big commercial advantage over our peers who furloughed staff,” said Mr Jenkinson.

“Our sales teams took 1,600 reservations over the lockdown. We continued to do site layouts and look at land opportunities, continued to work as well as we could from home . . . I believe in a bit of self-help,” he added.

Other major housebuilders, including Barratt Developments and Taylor Wimpey, that opted to tap the government’s furlough scheme have since committed to repay.

Barratt on Monday warned that construction might not return to normal levels for two to three months and called for an extension to Help to Buy to ensure that customers who planned to use the government’s equity loan scheme could still do so.

“This argument that we need to extend Help to Buy to stop customers losing their positions is not something Persimmon feels,” said Mr Jenkinson, who was confident he could deliver homes for those using the scheme by December, the cut-off date.

David O’Brien, an analyst at Goodbody, said Persimmon’s performance was “very strong”.

“Sales rates have rebounded strongly and build capacity is increasing . . . on build rates, Persimmon is well ahead of its competition.” 

Shares in Persimmon rose 5 per cent on the announcement, to £25.60, leading gains across the sector, which was buoyed by the chancellor’s announcement of a stamp duty holiday on Wednesday.

Housebuilders MJ Gleeson and Vistry Group, formerly Bovis Homes, also reported strong demand on Thursday. Gleeson’s forward orders were up 66 per cent to £145.3m. Vistry said its forward orders of £920m were on a par with the same time last year.

Persimmon did not update on its dividend, warning that “the longer-term impact of the Covid-19 pandemic on consumer confidence and the UK economy has yet to be seen”.

Mr Jenkinson will make way for Dean Finch, the boss of National Express, later this year. He took over as chief executive under two years ago, following the departure of his predecessor over a pay scandal, with the company facing an investigation over poor build quality.

The decision not to tap government support “could see the rehabilitation of Persimmon’s quite damaged public image”, said Alastair Stewart, an analyst at Progressive Equity Research.

Mr Jenkinson said the company had learnt to “always put customers before volume: if the demand outstrips what you’re building, don’t chase it”.


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