More on Persimmon
Persimmon: Trading update
Persimmon expects improved profits for the half year to June 2005, despite poorer trading conditions.
The company has completed around 6,000 houses, a similar level to the same period last year (H1 2004: 6,058 units). The company has increased the number of selling outlets by around 15%, widening its’ geographical coverage and is also spending more on incentives and promotions.
Average selling prices rose 7.6% to £184,000, partly due to better prices but also due to changes in specifications and selling mix, with proportionately more expensive units being sold. Sales have been strongest in Scotland and the Southwest of England.
The company says margins have been maintained and that cash generation is still strong. The company seems confident of its prospects and given current performance, there seems to be little threat to earnings this year. It is the medium term outlook that is the concern for this sector, the share trades at 743.5p, on a prospective PE(2005 earnings) of 6.4x, which is at the lower end of the sector range with a yield of 4%.
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