Persimmon – Building Profits

Persimmon – Building Profits
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  • Persimmon plc (LON:PSN), one of the UK’s leading house building groups has reported interim profits of £480m today, a jump of 64%.

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Q2 2021 hedge fund letters, conferences and more

  • Sales volumes jumped by almost 50%, compared to a lockdown-impacted performance in 2020 and the group successfully managed cost pressures to see margins rise by a full percentage point.
  • The shares were little changed in early trading.

Persimmon Is Upping Their Pace Of Land Buying

Commenting on the results, Steve Clayton, HL Select fund manager said:

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“We hold Persimmon in our HL Select UK Income Shares fund because of its strong cash generation abilities that leave it well placed to pay dividends back to shareholders. We’ve seen that ability today, with cash generation closely matching profits, allowing the group to return 225p per share so far this year.

The group are upping their pace of land buying to keep up with buoyant consumer demand for new homes. In the first half the group added 10,272 plots to the landbank, compared with new home completions of 7,406.

Land-buying is a key strength for the group and goes a long way to explaining how a business that sells its homes at an average price of £258k, some 15% below the national average, can still report profit margins of almost 28%. Quite simply, Persimmon have built a landbank of 85,000 plots that looks set to generate high returns as it is built out, for many years to come. Maintaining the built-in profitability of the landbank is probably the group’s number one challenge longer term.”

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