Persimmon expects lift in viewings

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Persimmon, one of the UK’s leading housebuilders, expects a quick return of prospective buyers to view its developments after harsh winter weather in December prompted the postponement of appointments.

The company, which late last year overtook rival Taylor Wimpey to become the UK’s top ranked housebuilder as measured by market value, also guided up on its profits performance and net debt reduction during 2010.

It maintained caution over the key spring sales period to come, however.

Mike Farley, chief executive, said in spite of the fall in viewings attributed to inclement weather, Persimmon would still deliver a sharp rise in underlying profit for the year to December, which would be the top end of analysts’ expectations. Forecasts had ranged between £75m ($117m) and £96m.

Persimmon, which in April 2008 held a net debt position of £1.2bn, also said it expected to beat previous guidance of ending the year with less than £80m net debt by confirming it had shrunk its burden to £51m.

Mr Farley said it was still too early to assess the likely outcome of the forthcoming spring sales season as he conceded that the housing market could remain in the doldrums for the coming year. Persimmon said in November that the autumn sales period had also been sluggish.

But Mr Farley added that the first trading weekend of the new year had seen a 10 per cent rise in reservations after the disruption to viewings in December.

“You can’t build forecasts on one weekend of sales, but the signs are encouraging,” he said.

Persimmon saw a rise in completed sales from 8,976 in 2009 to 9,384 in 2010.

A 6 per cent lift in average selling price to £167,000 – half due to a price recovery and half to a change in mix from apartments to houses – saw full-year revenues rise 10 per cent to £1.57bn. The company, which has enough land to support 6.3 years of future building, expects to open 70 new developments in the next six months.

Shares in the company, which have fallen 11 per cent over the past year compared with steeper declines for peers including Barratt Developments, Taylor Wimpey and Redrow, edged down 0.2p to 437.5p on Monday, valuing its equity at £1.32bn.

Rachael Waring, analyst at Panmure Gordon, described the update as “robust” ahead of updates from Barratt and Redrow this week and Taylor Wimpey next week.

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