Persimmon expects 'significant increase' in profits

In an upbeat statement this morning, Persimmon said turnover will be around 10% higher in 2010 than in 2009, after legal completions increased by 4.5% to 9,384. Average selling prices increased by around 6%, to £167,000. The combination of increased sales and selling prices has helped deliver a solid trading result, with turnover of £1.57bn forecast.

The statement said: “For the year just ended we have achieved a significant increase in underlying profit before tax, which will be at the top end of analysts’ expectations.”

Persimmon has also outperformed in terms of its debt reduction plans. A focus on margins and cash generation means that its debt pile has fallen to just £51m, compared to £267.5m at the end of December 2009.

With land values still to recover from the highs achieved in 2007, Persimmon has continued to add to its land bank, which now totals 59,000 plots, equivalent to 6.3 years of supply at current build levels. The firm added 5,000 plots in the second half alone.

Persimmon had previously announced that there had not been the usual upswing in house buyer activity during the autumn. Poor weather in several parts of the country had further reduced activity, it said, but this had yet to hit selling prices, which have remained stable. The firm has forward sales for 2011 of £565m and this has been achieved at margins similar to those achieved over the last few months.

A further update on trading for the first few weeks of 2011 will be provided along with its full year results on 1 March.

In a separate announcement, it said that after 32 years with Persimmon John White will step down as chairman on 21 April 2011. He will be replaced by Nicholas Wrigley, who has been a non-executive director since 2006 and is an executive vice-chairman of Rothschild, London.