Persimmon profits rise 13% in half-year results

Persimmon said customers are benefiting from a competitive mortgage market

PERSIMMON has reported a pre-tax profit rise of 13% to £516.3 million for the first six months of 2018.

The housebuilder revealed new home sales are up 4% to 8,072, while group revenue has increased 5% to £1.84 billion.

Alasdair Ronald, senior investment manager at wealth management firm Brewin Dolphin in Scotland, said, “Revenue growth of 5% had been flagged last month, boosted by volume growth and higher average sales prices, and this helped drive a 13% increase in pre-tax profit in the first six months of 2018. It’s good to see positive movement in Persimmon’s underlying operating profit, which rose by 13% to £518.2 million, and also further margin growth, rising to 30.8%.

“This is probably towards the top end of what can be achieved; although margins are being helped by the increasing use of materials that are produced by group subsidiaries (bricks and timber-frame units) and Persimmon is also looking to employ its workforce directly, rather than using subcontracted labour. The company is seen as the ‘blue chip’ in the sector and this is now reflected in the premium rating of the shares. Investors will be well rewarded with large dividend payments for the next three years, which will underpin shareholder returns; but prospects of capital growth are looking somewhat more limited.”