By Aby Jose Koilparambil
-Britain’s No. 2 homebuilder Persimmon Plc forecast on Thursday higher profit margins for the 2021 fiscal year as demand for new homes remained strong, and also named Aviva’s Jason Windsor as its chief financial officer.
Shares in the company, however, fell 3% by 0927 GMT. Analysts at J.P.Morgan said Persimmon’s statement was a mixed bag, with “slightly softer than expected volumes offset by better average selling prices and margins”.
Persimmon’s update also coincides with a tough week for UK homebuilders on the regulatory front after Britain asked top firms to pay for a larger share of the estimated 15 billion pound ($20.60 billion) cost of removing flammable cladding on apartment blocks.
Other housebuilders, including top player Barratt and No.3 Taylor Wimpey <TW.L also saw their stocks decline, with the homebuilders’ index down 3.3%.
Smaller rival Countryside Properties fell about 22% after flagging weak first-quarter performance and announcing the departure of its CEO.
UK homebuilders, nevertheless, have outperformed the broader real estate sector since the coronavirus pandemic as the preference for larger homes suitable for remote working, cheap loans, and an extended tax break that expired in September have kept the undersupplied housing market resilient.
Red-hot house prices in the UK have helped homebuilders stave off cost pressures from supply chain disruptions and labour shortages.
Persimmon said it expects its 2021 underlying operating margin to be about 28%, 0.4 percentage points above the year-ago period, while revenue rose 8.4% to 3.61 billion pounds.
The company constructed 14,551 new homes, compared with 13,575 units a year earlier, while forward sales, the contract signed between buyers and homebuilders for a purchase-and-sale agreement at a fixed future date, stood at 1.62 billion pounds, 20% ahead of pre-pandemic levels.
Persimmon also said Windsor, the group CFO with insurance firm Aviva Plc, is expected to join the company during the summer and will replace current CFO Mike Killoran, who is retiring this month.
($1 = 0.7289 pounds)