Persimmon cautious as recovery beckons

Persimmon has added to signs of recovery in the UK housing market by reporting improved results for the first quarter of 2009.

However, chief executive Mike Farley has warned that the market is still fragile, with sales down nearly 30% year-on-year to £960 million.

Visitor levels were down 15% compared to a year ago, although the company described this as “resilient” given it now operates from around 16% fewer active sites.

Meanwhile, cancellation rates for the first three months of the year stood at 16%, down from 35% in the final quarter of 2008.

The UK’s second-biggest housebuilder by market value also revealed that sales volumes had improved in recent weeks and were ahead of those seen a year earlier, with 6,500 reservations and contracted or completed transactions.

Persimmon sold 10,202 homes during the whole of 2008 compared with 15,905 in 2007, with the average selling price declining 9% over the year, to £172,994.

Last year the firm posted a pre-tax loss of £780 million including land writedowns and goodwill charges of £652.3 and £201 respectively.

However, the group’s debt has fallen from £1 billion to £680 million in the past 12 months and it successfully renegotiated terms with its lenders in December.

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