By Shashwat Awasthi
(Reuters) -British homebuilder Persimmon said it will construct more houses this year and target improved margins after 2024 profit beat expectations, sending its shares up more than 5% on Tuesday.
The forecast comes as affordability remains a concern in Britain’s housing sector. Interest rate cuts by the Bank of England are expected to provide some support, but there is uncertainty over the pace of further monetary easing and domestic growth.
“The underlying market fundamentals remain strong and we are encouraged by the further improvement in our sales rates in the early weeks of this year,” CEO Dean Finch said in a statement, as Persimmon reported a 14% jump in sales rate in the first nine weeks of 2025.
Persimmon said it was “mindful” of the potential impact from ongoing macroeconomic and geopolitical uncertainties, but was confident that it could increase profit and shareholder returns, and aim for margins of 20% in the medium term.
“While affordability has been and could yet continue to be an issue, the recent interest rate cut clearly sparked the mortgage market into life, especially for first-time buyers,” Richard Hunter, head of markets at Interactive Investor, said in a note.
Persimmon is more exposed to first-time homebuyers as it sells cheaper homes than peers Barratt Redrow and Taylor Wimpey.
Analysts had also expected some buying activity to have been brought forward ahead of the expiration this month of a temporary reduction in stamp duty land tax.
Persimmon will build between 11,000 and 11,500 homes in 2025, up from 10,664 last year. It added that it would restrict cost growth to low single digits this year after expenses grew almost 8% in 2024.
Annual underlying profit before tax rose 10% to 395.1 million pounds ($509.6 million) in 2024, beating a company-compiled consensus estimate of 380.3 million pounds.
Persimmon’s shares, which fell almost 14% last year, were trading 3.6% higher at 1,212 pence by 0830 GMT.
($1 = 0.7753 pounds)
(Reporting by Shashwat Awasthi; Editing by Sherry Jacob-Phillips, Kirsten Donovan and Joe Bavier)
