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Spotlight: Persimmon

FINANCE

AS THE housing industry's only FTSE 100 representative, Persimmon is the standard by which other quoted businesses are measured - and often the easiest target.

Persimmon has been vulnerable to snagging problems due partly to building more new homes than any other company.

Keeping track of pesky snagging is an issue for customers but this is improving across the industry and Persimmon has a better record than some marginally smaller rivals.

The group's share price performance can also be a gauge for the housing industry and, since last November, the stock has outperformed expectations. The interim results showed that the buying of Westbu ry is mostly paying off.

Before a £15.4 million hit from the reorganisation following the Westbury deal, interim profits surged to £309.1 million from £251.8 million this time last year.

Concern might lie in the board's belief that selling price rises in the full year will not be significantly ahead of what has already been achieved.

As a result, Persimmon is relying on cost efficiencies and keeping a lid on input costs.

Further savings may be wrung out of Westbury but build costs are problematic.

With inf lation rising, workers will expect similar increases, which will show up in bills from subcontractors, who are not desperate for work in a bouyant environment.

As the biggest player, Persimmon is better placed to cope with this than smaller rivals and the market's response to the recent results suggests the shares are worth keeping.