Persimmon reports an "excellent" start to the second half of 2020

The York-based firm reported a current forward order book of £2.5bn, a 21 per cent increase on last year.

Dave Jenkinson, Persimmon’s chief executive, said: “The group, governed by its clear purpose and values, reacted responsibly, swiftly and effectively to the challenges of the Covid-19 pandemic, with the safety and wellbeing of our workforce, customers and local communities our first priority.

“Taking an early decision not to take advantage of the furlough scheme for any colleagues, we maintained good momentum in the business, continuing to serve our customers, making detailed preparations for a safe return to work and, when it was appropriate, restarting our build programmes efficiently.”

He said that build rates were back at pre-Covid levels by the end of June.

“Despite the significant disruption, the group’s preparedness, agility and strength ensured a robust first half performance with 4,900 new home completions and further good progress made on our customer care improvement plan,” he added.

“Our strong opening work in progress position and excellent build rate through the summer give us confidence in a positive second half outturn. We expect that by the end of September, we will have delivered around 45 per cent of our anticipated second half new home legal completions.

As a result of the strong performance of the business through what it described as a challenging period, together with cautious optimism on prospects for the second half, Persimmon is proposing a “modest” interim dividend of 40p per share. It said further dividend payments this year will remain under close review.

Mr Jenkinson said Persimmon’s reaction to the Covid disruption “showed very clearly the exceptional quality of our colleagues throughout the business and I’m very proud of their response to the recent challenges”.

“Our team, together with our strong balance sheet, high quality land holdings, significant investment in work in progress, a transformed customer care programme and a 5-star HBF rating now within reach, gives Persimmon a strong platform from which to deliver the homes the country needs, support the UK’s economic recovery and drive long-term sustainable value for all our stakeholders,” he added.

“We are really pleased with what we’ve seen. Obviously it’s been a challenging first half because of Covid, but I think we’ve responded well.

“We are very pleased with our sale rates since July. We’ve seen some real, tangible benefits from our customer care programme. We’ve been trading as a 5-star builder since the turn of the year, so yes, everything looks in a good place.”

When asked whether the pandemic will prove to be a blip or a game changer, Mr Jenkinson said: “I don’t know. I’m planning for both scenarios. That’s what we do at Persimmon.

“If you plan for one scenario, it’s inevitable that you’ve got a 50 per cent chance of getting it wrong. So we plan for both scenarios. We hedge our bets and that’s what we’ll continue to do.”

Persimmon sold 4,900 homes in the first six months of the year compared with 7,584 in the year earlier period, with the average selling price rising to £225,066 from £216,942. Pre-tax profit fell to £292m from £509m.

Richard Hunter, head of markets at Interactive Investor, said: “This year is increasingly looking to be a game of two halves for Persimmon, with the outlook rather brighter than the pandemic-hit first few months.

“Persimmon is regarded as a favoured play within the sector and, on the whole, this update underlines those credentials. The shares have recovered by 70 per cent since the indiscriminate markdowns in March, and over the last year remain 42 per cent ahead, which is a significant outperformance of the broader FTSE 100, which has declined by 14 per cent over that period.

“This potentially early return to form from Persimmon has been well received in early trade against a weak broader market, and the market consensus of the shares as a strong buy seems safe on strong foundations.”