NEW! Investment Companies Centre

Update: Persimmon shrugs off profit plunge

Related Companies

Related Indices

Related Sectors

News for Spread Betters

PreviousPrevious
NextNext

There's a new Investor Edition of CMC Markets' spread betting platform... and it's exclusive to DigitalLook.com users...

Get full details about Marketmaker:Investor Edition here. Advertisement

By Lee Wild

Date: Thursday 21 Aug 2008

LONDON (ShareCast) - Investors piled back into housebuilder Persimmon today, welcoming smaller than feared write-downs on its land portfolio and a more positive outlook.

They ignored a massive 87% plunge in pre-tax profit for the first six months of 2008 from £281.1m to £36.9m and a 73% cut in the dividend.

“The business has performed well in very difficult conditions,” said chairman John White. “We are confident that our business, having been restructured, is in a strong position to move forward whenever the market improves.”

“Whilst at the beginning of April we experienced a significant market downturn, sales volumes since then have not deteriorated any further,” added the group.

Underlying pre-tax profit sank 64% to £100.9m, although that figure is before exceptional restructuring costs of £15m and exceptional land write-downs and associated costs of £49m.

Weaker selling prices forced the firm to write-down owned land by about £40m, or 1.5% of the value of the landbank on its balance sheet. Turnover dropped 34% to £998.4m.

It sold 5,501 homes during the period due to a “significant reduction in mortgage availability”, down 31% from 8,002 in 2007, at an average £181,485 versus £189,255 a year ago.

Persimmon said sales for the second half are currently at around £835m versus £1.35bn this time last year. Prices and margins remain under pressure as the industry seeks to offload houses.

The result of its £15m restructuring, which includes around 2,000 job losses and postponing some new site starts, will save the group around £45m a year from September this year.

The dividend is slashed to 5p from 18.5p.

Digital Look have been voted
"Best Research and Information Provider"

4th Floor, Bankside House, 107 Leadenhall Street, London EC3A 4AF.
Registered in England and Wales (registered no. 3678570).