More on Persimmon
Persimmon: H1 2006 trading statement
Persimmon, the housebuilder released a positive trading update for the half year to June 2006. The company said like-for-like sales reservations were up 7% while sales revenue (bookings for the full year) was around £2.4bn (H1 2005: £1.78bn).
Units booked for the full year rose to 13,000 from 9,974 in the same period last year.
The bookings figures quoted above represent the number of units that customers have confirmed, although many of these will actually be completed in the second half of the year.
Legal completions, ie sales where the ownership has actually passed to the buyer, stood at around 8,000 units in the six months to June 2006 (H1 2005: 5,954 units) up around 34% at an average selling price of c. £188,000 (H1 2005: £183,581). Reported turnover (based on legal completions for the period) will be over £1.5bn (H1 2005: £1.09bn).
Persimmon seems to have defied trends seen across much of the rest of the industry which has been characterised by slowing sales volumes and falling prices and profits. Short term prospects for the company will be boosted by its acquisition of Westbury, but in the longer term, growth will be determined, in part at least, by the housing market as a whole.
We have been wary of the sector for some time: rising interest rates and slowing consumer spending should lead to slower economic growth with consequent impact on the housing market.
The share trades at 1280p, on a prospective PE (2007 earnings) of 8.6x, within the sector range with a yield of 2.9%.
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