Persimmon, the UK’s largest housebuilder, has said it will restore its dividend as a rapid rebound in property sales buoys its prospects.
The company said better than expected demand for its homes had allowed it to reinstate a payout that was suspended in late March. Investors will receive 40 pence a share. The only other listed UK housebuilder paying out a dividend is Berkeley Group, which opted not to suspend payments, according to analysts.
Buyers have returned in a flurry since lockdown measures were eased in May, and were further boosted by the government’s introduction of a stamp duty holiday in July. According to property portal Rightmove, July was the busiest month in a decade, with £37bn worth of deals agreed.
Persimmon’s sales in the seven weeks since the start of July have been 49 per cent ahead of where they were in the same period a year ago, according to the builder, which announced its first-half results on Tuesday.
Profits at Persimmon have tumbled, however, thanks to fallout from the coronavirus pandemic.
The builder’s pre-tax profits for the six months to the end of June slipped 43 per cent, to £292m, after it was forced to close construction sites for more than a month. The company completed 4,900 homes in the six months, compared with 7,584 in the same period a year earlier.
But Persimmon’s order book has grown, despite the effects of the pandemic, which forced Persimmon and other builders to close sites on March 25. Forward sales are running at almost £2.5bn, against £2bn a year ago.
The company beat its rivals out of the blocks once lockdown measures eased, according to Aynsley Lammin, an analyst at Canaccord Genuity. “They have been quicker. Operationally they obviously got everything ramped up,” he said.
Unlike most other large housebuilders, Persimmon did not make use of the government’s furlough scheme. Peers that did, including Barratt Developments and Taylor Wimpey, subsequently committed to pay back what they had received.
“The decision to not furlough meant we were ready for when the lockdown was released. We had good visibility and we knew there was a lot of market demand out there. That gave us confidence and conviction to get on site quickly,” said Dave Jenkinson, Persimmon’s chief executive, who will be replaced by National Express boss Dean Finch at the end of the year.
The company is building at full capacity, according to Mr Jenkinson, while a number of rivals are at only 80 per cent. Taylor Wimpey announced last month that it had swung to a pre-tax loss in the first half of the year.
Shares in Persimmon were up 5 per cent to £27.40 in morning trade. The company’s share price has recovered further and faster than its largest rivals, gaining 79 per cent from a March 19 low but is still trading at a discount to where it started the year.