Builder Persimmon sees muted 2011 growth

Published 13th Jan 2011

British housebuilder Persimmon warned of little price growth this year with weak consumer confidence continuing to drag as it reported annual underlying pretax profit at the top end of market views.

"I think sales prices will be fairly muted -- and sales growth effectively," Chief Executive Mike Farley told Reuters.

"People are looking to buy houses, but against the overall economic situation, people are still being cautious," he added.

The picture looks bleak for the UK housing market as economic uncertainty and government spending cuts, have dented consumer confidence, coupled with an ongoing lack of mortgage availability.

The Halifax building society said on Monday UK house prices fell 1.3 percent in December, more than three times faster than expected.

Furthermore, a blanket of snow in December paralysed Great Britain and its consumers, hitting retail outlets.

Persimmon said sales activity slumped 50 percent in December, but the impact was offset by pre-Christmas trading being seasonally quiet and buyers returning to the market.

"It's been an encouraging start to the year. We have seen good visitors to sites. We have taken some sales, that's obviously from people who would have viewed before Christmas," said Farley.

Peer Bellway said on Friday that its full-year results in July will depend heavily on a pick-up in consumer confidence in the crucial Spring selling season.

Persimmon, the UK's largest homebuilder by market value, said full-year underlying pretax profit will be at the top end of expectations, after increasing its sales revenues and lowering its cost base.

Analysts are expecting an underlying pretax profit of 85 million pounds, from a range of 75 million to 96 million, for 2010 according to a poll of 21 analysts compiled by the company.

Persimmon said it completed 9,384 homes in the year ended Dec 31, against 8,976 last year.

Prices rose by 6 percent to 167,000 pounds, lifting turnover by 10 percent to 1.57 billion pounds. It also significantly reduced its debt, through aggressive cost-cutting measures, to 51 million from 267.5 million at the end of 2009 which it added was ahead of original expectations.

"Persimmon has reported a robust trading update for the year ended December 2010E and our forecasts move up," said analysts at Panmure Gordon.

"However, the outlook for 2011E remains uncertain," they added.

Source: ' Reuters '

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