Persimmon plc (LON: PSN) releases robust performance with strong housing demand

Source: TFoxFoto, Shutterstock

Summary

  • Persimmon plc delivered a profit before tax of £784 million for FY 2020 ending 31 December.
  • The leading UK housebuilder handed over a dividend of 110p per share to its shareholders.
  • The company said demand for homes was strong at the beginning of 2021 and forward orders were 15 per cent higher compared to last year.

 

British home building company Persimmon plc (LON: PSN) has released its results for the year ended 31 December 2020 on Wednesday, 3 March, generating a profit before tax of £784 million (2019: £1,041 million). Despite the challenges due to Covid-19 outbreak, the company delivered a robust performance. The company reported that its average selling prices rose by a healthy 6.9 per cent for the year.

The builder makes and sells 'homes for all' in a wide range of house types at varied price points. The number of new homes completed by Persimmon was 13,575 for 2020 (2019: 15,855) with an average selling price of £230,534 (2019: £215,709). The firm expects to sell similar number of homes this year as it did in 2019. Further, the FTSE 100 firm displayed a strong balance sheet with quality land holdings. There were 84,174 plots owned by 31 December 2020 (2019: 93,246).

Copyright © 2021 Kalkine Media Pty Ltd.

Also Read: UK house prices rise with growing demand, says Rightmove survey

Strong demand for homes

The company said that the demand for homes remained strong in the beginning of 2021 with forward orders up by 15 per cent while sales higher by 7 per cent as compared to the same period previous year.

The stamp duty holiday announced by the UK government last year in July has been instrumental in pushing up the demand and prices of homes across the nation despite a sluggish economy.

Also Read: Property prices soar unexpectedly in Feb due to stamp duty holiday  

Profits fell to £784 million for 2020 by 25 per cent compared to 2019 due to lower housing activity mainly during the coronavirus lockdowns. At the same time, the company’s net cash balance jumped to £1.2 billion for the year ((2019: £844 million).

Dividend

The company had already resumed paying dividends after its brief suspension during the first lockdown in March last year. The UK housebuilder handed over a dividend of 110p per share for 2020 (2019: 235p per share).

The company plans to pay out a postponed dividend this year. A regular yearly payment of £1.25 would be moved forward to March from June. In 2020, Persimmon would return to an annual dividend payout of £1.25.

Dean Finch, CEO of Persimmon, said that the firm will focus on improving its build quality going forward.  It plans to strengthen its inspection regime in this regard, he added.

Stock performance

After the results, the company stock (LON: PSN) was trading at a value of GBX 2,835.00 at 9.57 am on 3 March, up by 4.61 per cent from its previous day’s close value. The volume of shares traded were reported to be 282,887.


Disclaimer
The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media Limited (Kalkine Media, we or us) and is available for personal and non-commercial use only. Kalkine Media is not authorised or regulated by the Financial Conduct Authority to provide regulated advice. The purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. The Content is guidance about the different types of investments that are available and sets out general principles to continue before making investment decisions. Kalkine Media is neither authorised nor qualified to provide regulated investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from an appropriately authorised and/or qualified financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary. Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source wherever it was indicated as or found to be necessary.