More on Persimmon
Persimmon: FY05 results
Persimmon, the housebuilder reported a 5.9% increase in pre-tax profits for the year to December 2005 (to £495.4m). Operating margins at 23.1% were slightly weaker than lat year (23.4%) but respectable nevertheless. Completions rose to12,636 houses (2004: 12,360) at an average selling price of 180,892 (2004: £172,431).
Most interestingly, the company completed the £643m acquisition of Westbury in January 2006, which should boost growth this year.
Sales for the current year have started well, clocking 7000 units at a total value of around £1.25bn (including an initial contribution from Westbury). The company says it has detected an increase in confidence and higher visitor levels but admits that it is too early to predict the market for 2006.
The acquisition of Westbury should ensure a strong performance in the current year but sustainability in the medium term will depend on how the housing market turns out. Investors with a healthy appetite for risk can look at the construction (or indeed the general insurance sectors), risk averse investors are likely to be best served by the oil and mining sectors.
The share trades at 1418p, on a prospective PE (2006 earnings) of 10.4x at the upper end of the sector range with a yield of 2.4%.
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