Major UK housebuilder reveals COVID-19 is not slowing down demand

Tom Belger
·Finance and policy reporter
·3-min read
Persimmon announced a second dividend. Photo: Darren Staples/Reuters
Persimmon announced a second dividend. Photo: Darren Staples/Reuters

Housebuilder Persimmon (PSN.L) is set to reward shareholders as it revealed tighter coronavirus restrictions across the UK have had only a “relatively limited impact” on its operations.

Persimmon, which shut down sites during the first UK lockdown, said its construction sites, sales offices and manufacturing facilities all remained open in England. The government has allowed the property and construction sectors to continue to trade.

A trading statement by the leading housebuilder on Tuesday highlights how it has benefited from the housing market boom since the first lockdown eased and stamp duty was slashed in England and Northern Ireland.

Building activity returned to pre-virus levels at the end of June, and average sales rates every week have been 38% higher between July and November than the same period a year earlier. It has £1.36bn ($1.8bn) of forward sales beyond 2020, up 43% annually.

Strong sales saw the company reveal plans to pay another interim dividend of 70p per share in mid-December, on top of a 40p per share payout in September. The payments replace a previously postponed a 110p final dividend for last year.

READ MORE: Can the UK construction and housing boom ride out a tough winter?

“Demand for new homes has remained resilient despite the continued challenges surrounding the Covid-19 pandemic, the UK economy and the uncertainty relating to the nature of the UK's future global trading arrangements,” said its latest statement.

The company was forced to close its sales office during Wales’ two-week lockdown, and its regional offices are closed with staff at home.

But it told investors: “These measures, together with the recent tightening of Covid-19 restrictions across England and Scotland, had a relatively limited impact on the group's operations.”

“We are well prepared for this second lockdown and continue to work with our subcontractors and supply chain to maintain the group's operations.”

READ MORE: Taylor Wimpey expects to smash through profit forecasts

It expects completions in the second half of this year will be at least in line with the same period last year, as long as COVID-19 restrictions do not cause significant disruption to construction.

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Persimmon, which has faced heavy criticism over home quality and workmanship in the past, highlighted improvements in customer satisfaction ratings in industry surveys. “The Group remains committed to improving build quality and customer service,” it said.

"The company spent the first lockdown wisely, getting its business COVID-safe so that it could swiftly reopen and now it is able to carry on trading through the second lockdown. And customers have come flocking," said Steve Clayton, who manages a Hargreaves Lansdown fund which holds Persimmon stocks.

He called it a "confident statement" by the company, adding: "Crucially, the cash has come rolling in as the company has converted its well-bought land into completed house sales."

It comes after:

  • Rival Taylor Wimpey (TW.L) shares soared on Monday after it predicted profits “materially above” consensus estimates, with its £3bn ($3.94bn) order book with 11% more than a year earlier.

  • Another leading UK housebuilder, Redrow (RDW.L), said on Friday its turnover had jumped 48% year-on-year, with its own order book up 10% and “close to record levels” at £1.5bn.

  • The latest UK house price data from Halifax on Friday showed average prices breach the £250,000 mark for the first time in history, up 7.5% year-on-year in the highest annual growth since 2016.