Commercial Property News

In its H1 results today Pesimmon Homes, Britains number 1 by market value and number 3 by homes sold, has delivered a pre-tax profit of £36 million after taking a £64 million charge for slimming down operations to adjust the business to current volumes. This compares with a pre-tax profit of £281.1 million last year, an 87% fall in difficult market conditions. Persimmon has cut its dividend to 5 pence per share from 18.5 pence, to preserve cash.

Volume of houses sold is down 32% at 5501 on the previous first half of 2007 as was average selling price from £189,255 to £181,485. This combined to produce a turnover of £998.4 million off 34% from H1 2007.

loadAd('mpThe firm expects to deliver 90% of it's forecasted 2008 turnover as market conditions appear to have stabilised and sales being made are allowing it to reduce stock and garner cash. The uncertainty about Stamp Duty has caused delay in many buying decisions.

'We are surprised to see the group claiming that trading has not deteriorated since the slowdown in April, which flies in the face of comments from others housebuilders,' Landsbanki analyst Simon Brown said. 'This and the anticipated free cash flow of £200 million in the second half should reassure doubters that Persimmon can successfully weather this storm.'

Persimmon, which in the last few months has restructured and cut 1,100 jobs, was cautious in its outlook as prices and margins remained under pressure in an industry trying to dispose of stocks of houses. It said that activity levels in the autumn selling season would give a clearer picture for 2009.

John White, Group Chairman said:

"The business has performed well in very difficult conditions. We are confident that our business, having been restructured, is in a strong position to move forward whenever the market improves."

'The recent speculation regarding a change to stamp duty on housing transactions has undoubtedly caused further delay and uncertainty in respect of house purchases,' the housebuilder said.

'However, we are pleased that the government has confirmed it is considering various alternatives for assisting the housing market, particularly with respect to improving mortgage availability.'