By Aby Jose Koilparambil
(Reuters) -British housebuilder Persimmon forecast its 2024 earnings at around the upper end of market view on Tuesday, buoyed by improved sales and pricing strength.
Shares in the FTSE 100 builder rose about 4.5% to 1,104 pence in early trade, lifting the broader housing index, with most of its blue-chip peers gaining around 3%.
The group said it was keeping watch on the UK interest rate environment and broader economy. Britain’s housing sector has been cautious in recent months due to concerns that a slow pace of interest rate cuts by the Bank of England could delay a demand recovery.
“We are mindful of evolving macroeconomic and geopolitical uncertainties, including the timing of future interest rate changes, and the effect that they may have on our market and consumer confidence,” said CEO Dean Finch.
Tax hikes, an impending rise in labour costs, fears the UK government could cut spending and rising concerns over the country’s growth prospects have dampened the economic outlook.
Investors have sold British government bonds heavily in recent weeks, partly due to worries that inflation is likely to prove too high for the BoE to cut rates much this year.
Persimmon, which offers homes ranging from studio apartments to five-bedroom houses, said it built 10,664 homes in 2024, up 7% and ahead of market expectations.
Its forward sales position – a key industry measure which gauges near-term demand – was up 8% to 1.15 billion pounds ($1.40 billion) by the end of last year.
Third Bridge analyst Yanmei Tang said in a note that Persimmon was better positioned than many competitors due to its focus on mid-market to lower-priced homes, providing a buffer against broader market pressures.
Persimmon, which has a higher exposure to first-time buyers than some of its FTSE 100 peers, said its 2024 private average selling price rose 0.5% to 287,150 pounds.
It expects underlying profit before tax for the year ended Dec. 31 to be around the upper end of market expectations of 349 million pounds to 390 million pounds.
($1 = 0.8187 pounds)
(Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Rashmi Aich and Jan Harvey)
