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Persimmon profits soar as demand for new homes rises

Persimmon has reported a 39 per cent increase in its pre-tax profits to £132m in the first half of 2013 from £94.8m last year as it meets the rising demand for new homes.

It completed 5,022 new homes in the first six months of the year – an increase of 7 per cent compared with the same period in 2012, when it delivered 4,712.

The firm also increased its operating margin by 3 percentage points to 15.1 per cent from 12.1 per cent in the first half of 2012, achieving its targeted operating margin range of 15 to 17 per cent 18 months ahead of schedule.

Persimmon chairman Nicholas Wrigley hailed a period of “solid progress, with further increases in output, operating margin and cash generation, against a backdrop of improving customer demand”.

He added: “To deliver the volume to meet this increased demand, we are maintaining our strong investment in land and stepping up our investment in construction.

“The group will open 85 new sites before the end of the year and is building on all sites where it has an implementable planning consent, creating many new jobs in the process.”

He added that Persimmon’s multi-year trade apprenticeship programme has been expanded and will see more than 100 apprentices join the business each year.

The average selling price of new homes sold in the period was £179,199 – a 5 per cent increase on an average price of £171,206 in the first half of last year.

Mr Wrigley said the improvement in availability of mortgage credit, a gradual reduction in mortgage interest costs and the introduction of the government’s Help to Buy equity loan scheme in April have helped to boost sales of new homes.

He added: “The government’s Help to Buy equity loan offer has seen a strong take-up in the market. We have now achieved more than 1,700 reservations on this scheme.”

In its April trading update, Persimmon said it was “confident” these measures would support an increase in the number of new homes delivered by the industry over the medium term.

The firm’s current order book as of 1 July 2013 is 21 per cent up on the same point last year at £1.26bn compared with £1.04bn in 2012.

Persimmon invested £236m in new land during the period, acquiring 7,538 new plots and taking its total number to 70,716, which it said will support further growth of the business.

Mr Wrigley said: “Through the second half of this year we will continue to focus on the basics of good housebuilding to deliver further improvement in the performance of the business.

“We anticipate that Persimmon will continue to make good progress, but we remain mindful of the wider economic challenges facing the UK economy.”

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