Why York-based housebuilder Persimmon has seen its profits and revenues fall

Housebuilder Persimmon said it delivered a robust performance despite seeing revenues and profits fall for the year ended December 31, 2020.

A Persimmon house.

The York-based housebuilder reported a fall in pre-tax profit from £1.04bn to £783.8m while total group revenues fell from £3.65bn to £3.33bn.

New home completions also fell from 15,855 to 13,575 but its new home average selling price rose from £215,709 to £230,534.

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Dean Finch, chief executive of Persimmon, said: "Persimmon delivered a robust performance in 2020 despite the challenges presented by the pandemic.

"I would like to commend our workforce for the effective way Covid-secure operating protocols have been adopted, protecting our customers, local communities and colleagues alike whilst maintaining effective on-site operations.

"I am particularly pleased we have delivered all this whilst continuing to see an increase in our HBF eight-week customer satisfaction score, with our current rates above the five-star threshold.

"We must build on this important progress and further enhance our build quality and customer care so we are known for both outstanding service as well as outstanding value.

"To achieve this we will further strengthen our build quality and independent inspection regime within the Persimmon Way. This will both drive efficiencies that will pay for these improvements and enhance our capabilities, enabling us to build a greater volume of homes at five-star.

"We have also set new environmental targets in line with the Paris Agreement and will seek to further develop the Persimmon Way to embed the specific measures that will deliver on these targets in the future.

"In addition, having adopted the principles of the Living Wage Foundation within our direct pay policies we are seeking full accreditation in working with our broader supply chain and development partners.

"Persimmon is a company of many strengths with great opportunities ahead. Combining the business' entrepreneurial spirit and astute land buying with enhanced quality, efficiency and service standards will drive superior, sustainable value creation for our shareholders and broader stakeholders alike."

The group said its forward order book, including new home legal completions taken so far in 2021, is 15 per cent stronger year-on-year with new home forward sales of around £2.3bn.

Persimmon has around 6,550 new homes sold forward into the private owner occupier market with an average selling price of circa £251,300.

Dan Lane, senior analyst at Freetrade, said: "A solid forward sales book will be a shining light for shareholders wincing at the damage 2020 has done to Persimmon’s balance sheet.

"But even then the company can’t avoid mentioning the ‘government support measures’ propping up the orders.

"Persimmon has been a huge beneficiary of the Help to Buy scheme and, judging by the Chancellor’s plans today, it plans to keep riding the government support wave.

"There’s the potential for public outcry in all of this though. These government schemes may have got young people in particular onto the property ladder but they didn’t do it by actually tackling inflated prices."

He added: "A positive note this morning was the guidance around dividends and the company’s commitment to its income-seekers throughout 2021. It’s been a tough year for yield hunters and seeing that commitment rather than a tentative return to payouts, as we’ve seen with other firms, is likely to settle a few nerves."

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James Mitchinson