Housebuilder Persimmon (PSN.L) has hailed another strong performance as the ongoing UK property boom continues.
Private average sales were up 2% year-on-year, while trading remained in line with management forecasts, it said.
The London-listed group now expects to deliver growth of between 4% and 7% on 2021 levels this year as demand for its homes remains strong. Build completions are also expected to accelerate during the second half.
Forward sales and cash held of £2.8bn ($3.5bn) and £446m respectively offered reassurance for investors, while the average selling price is up 5.5% to £266,000 compared to £252,000 last year.
"As expected, reflecting the profile of outlet openings, we anticipate that completions this year will be weighted towards the second half, with first half completions being lower than those delivered in the first half of 2021,” Dean Finch, chief executive, said.
“We continue to believe the £75m provision we have already set aside [for cladding removal and fire safety] remains appropriate.”
A year ago, Persimmon made a pledge that leaseholders in any multi-storey building it had constructed would not have to pay to remove any cladding or correct fire related safety issues, in the wake of Grenfell Tower.
It is currently on track to open around 75 new outlets during the first half of 2022, subject to achieving planning consents. It already has around 300 active outlets across the UK.
In addition to the scheduled dividend of 125p made in April, a further payment of 110p is set to be returned on 8 July 2022.
Shares fell 1.3% following the announcement.
“This latest trading update from the housebuilding sector continues to defy investor worries about a tougher backdrop,” Keith Bowman, investment analyst at Interactive Investor said.
“Rising UK interest rates to battle an inflation surge and a cost-of-living crisis for consumers are a concern.
“A price to net asset value ratio at close to two times for Persimmon is also comfortably above rivals such as Barratts (BDEV.L) and Bellway (BWY.L) at under one, suggesting the shares are not obviously cheap.”
He added: “That said, demand for new homes appears robust, house price increases are helping counter rising build costs and a prior £75m provision to cover cladding costs has already been taken.
“For now, and with the shares offering an estimated dividend yield of over 10%, analyst consensus opinion continues to point towards a buy.”
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