Persimmon sees results at top end of expectations

Housebuilder Persimmon said it expects a 50% increase in underlying pre-tax profit after it introduced a raft of measures to combat the sluggish UK housing market.

An improvement in underlying operating profit and a reduction in net finance costs will result in full year underlying pre-tax profit being towards the top end of analysts' expectations, the group said

The UK's second largest homebuilder said new home legal completions remained steady at 9,360 in the year ended 31 December 2011 compared to 9,384 in 2010. Total revenues for the period were around £1.53bn, below average analyst forecasts. Its average selling price fell by 2% to £164,000.

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"Whilst the general economic backdrop to the UK housing market remains challenging we have experienced encouraging levels of visitors, resilient sales reservations, low cancellation rates and stable prices," the group said in a company statement.

Persimmon said take up of the Government's FirstBuy Scheme has been encouraging and as a result the group has legally completed more starter homes in 2011. The increase in first time buyers was a key factor in bringing down the group's average selling price.

The company completed 9,360 homes in 2011 compared to 9,384 the year before.

Persimmon anticipates that underlying operating margin for the year will approach 10%, with a margin for the second half of over 10.5%.

Persimmon has introduced a string of measures to counteract the difficult housing market including securing improvements in existing planning permissions, cost control, opening new outlets from recently acquired land and converting land from its land bank for future development.