Sales Boost and Profits Persimmons and Berkeley – Despite the fact that lending remains constrained and prices stagnant property developers such as Persimmon and Berkeley have managed to increase their margins by focusing on the South East.
Sales Boost and Profits Persimmons and Berkeley – Technically on the higher margin family houses and currently avoiding apartments and building on cheap land acquired during the peak of the recession of 2008 Points This can be seen according the following points by the Financial Times
- Persimmon increase in operating margins to more than 11.5% compared with 9% a year ago. £150million spent on land in the first half, covering 5.600 new plots and taking its land bank with planning consent to 63,800 plots compared to last year June 62,364. Persimmon Homes completed 4712 properties in the first half , 6% more that the same time as year ago.
- Berkeley declared a full year profits climbing 58% to £214 million, with an increase of 40% in the number of houses it sold. It has mentioned that it would meet its objective of growing the value of its land bank to £3 billion by April 2014 , a year earlier than anticipated.
Mr Farley said the market was steadily improving as a result of pent-up demand from first-time buyers “but not racing away”. “There’s small gradual growth and we prefer it that way,” he added. He warned that the traditional August slowdown may be exacerbated by the Olympics this year. “People will understandably stay at home during the Olympics rather than visiting our sites.” Charlie Campbell, analyst at Liberum Capital, rated the shares a hold. “This looks positive.
Persimmon’s strong cash flow suggests that their strategy of buying up swathes of land early in the planning process has been vindicated. They seem to have more than enough cash in the bank to make the first dividend payment of £227m in 2013.” Of Berkeley, Mr Campbell said; “The company is sticking with its guidance of making £220m pretax profit in April 2013, but this looks a little conservative as forward sales at the end of April are up 30%. Strong London and south east markets should also be enjoyed by Barratt Developments and Taylor Wimpey”