Keep calm and carry on, urge region's PLCs

Housebuilder Persimmon, landscape products business Marshalls, musical instruments retailer Gear4music and urban regeneration specialist MJ Gleeson have issued trading updates which suggest they feel confident about dealing with any downturn caused by Britain’s historic vote to leave the European Union.

York-based Persimmon posted robust home sales and assured there would still be “good opportunities” in Britain’s property market.

The Charles Church builder said that, while it was “too soon to judge” the impact of last month’s vote to leave the EU, it believes the “market fundamentals remain strong”.

In an update before full half-year results next month, the group said it took “good levels of sales” throughout May and June, with private sales around one per cent higher year on year despite the uncertainty ahead of the EU referendum and tough comparatives from a year earlier.

Its comments come after shares in UK-listed housebuilders took a hammering following the Brexit vote amid fears it would spark a downturn in the housing market, with 38 per cent wiped off Persimmon’s stock market value in a savage two-day rout. But shares across the sector have since rallied higher as markets have recovered.

Persimmon said its strategy to focus on traditional family housing would “continue to attract customers in good numbers”.

Persimmon also assured over its financial strength and insisted a 10-year strategy put in place in 2012 was designed to help the group withstand knocks to the housing market.

Laith Khalaf, a senior analyst at Hargreaves Lansdown, said: “You wouldn’t guess from Persimmon’s results that the company has lost around a third of its value in the last fortnight.

“However, that’s because the stock market is looking forward to the next six months and beyond, and the Brexit vote is casting a long shadow over the UK housebuilding sector. Persimmon, quite rightly, point out that it’s really too early to judge the effect of Brexit on the new homes market.

“The company isn’t blinking when it comes to its capital return programme either, and still plans to pay out a further £5.50 per share to investors by 2021.

“Based on the current share price, that means investors will get over a third of their investment back in cash over the next five years, provided Persimmon are able to make good on their promise.

“Low interest rates, and a big supply-demand imbalance in the UK housing market, will continue to be supportive of the housebuilding sector. Likewise people aren’t suddenly going to stop wanting to own a home simply because the UK is no longer going to be a member of the European Union.

“However, until we get a picture of housing activity following the referendum result, the stock market is likely to push the sell button first, and ask questions later.”

In a trading update, Marshalls, the landscape products group, based in Elland, West Yorkshire, said that “notwithstanding the potential for uncertainty following the result of the EU referendum, the underlying indicators remain positive”.

Gear4music, the York-based online retailer of musical instruments and music equipment, said it had posted a 191 per cent increase in European like-for-like sales in the first full week following the UK’s EU referendum vote.

The company said that this compares favourably with a 120 per cent increase in European like-for-like sales in the week preceding the referendum vote. The company also said that its European sales were supported by favourable exchange rates and responsive pricing.

In a trading update, Jolyon Harrison, the chief executive of MJ Gleeson, the Sheffield-based urban regeneration and strategic land specialist, said: “Gleeson Homes continues to see strong demand for its low-cost homes.

“The EU referendum has not affected our core customer base for whom the decision to become home owners is not influenced significantly by market or media sentiment.”