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Earnings · Government Policy · Housebuilding · UK Housing
Persimmon, a major UK housebuilder, reported a challenging 2020, with pre-tax profits falling 25% to £783.8 million and revenue down 9% to £3.33 billion due to pandemic-related construction halts.
The number of new homes built dropped by 2,300 to 13,575, and dividends were halved to 110p. Despite this, the company has started 2021 on a stronger note, with average private weekly sales rates up 7% year-on-year and forward sales reaching £2.3 billion, a 15% increase.
This recovery is largely attributed to supportive government and Bank of England policies, including the record-low 0.1% base rate, readily available mortgages, and the stamp duty holiday, which is widely expected to be extended. Analyst Dan Lane of Freetrade highlights Persimmon's significant reliance on schemes like Help to Buy, noting that while these policies aid buyers, they also boost housebuilders' bottom lines by allowing them to factor in subsidies and maintain profit margins, potentially leading to public criticism over inflated housing prices.
CEO Dean Finch acknowledged a "robust performance" given the 2020 challenges.