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Abu Dhabi, UAETuesday 26 March 2019

UK house builder defies Brexit gloom as profits soar

Persimmon said pretax profit rose to £1.09 billion for 2018

A Persimmon development in Coventry, in the UK's Midlands. The firm has seen earnings surge. Reuters
A Persimmon development in Coventry, in the UK's Midlands. The firm has seen earnings surge. Reuters

Profit at Persimmon rose by 13 per cent last year as Britain's second-biggest house builder sold more homes despite uncertainty from Britain's impending European Union exit.

Persimmon, which last year faced an investor mutiny over its former chief executive's pay, said pretax profit rose to £1.09 billion (Dh5.28bn).

The company, which has focused on building cheaper family houses, said interim CEO Dave Jenkinson would take on the role permanently after Jeff Fairburn stepped down last year amid criticism of his $100 million bonus package.

Mr Jenkinson has agreed not to receive a bonus in 2019, with Persimmon and other house builders facing an overall sluggish housing market. People are shying away due to smaller household incomes and Brexit keeping foreign investors at bay.

"The lack of clarity with respect to the UK's exit from the EU is currently creating additional unpredictability," Persimmon said. It added that it was working with suppliers to identify materials whose availability may be restricted.

British property surveyors are the most downbeat about the short-term outlook for house prices in nearly eight years, and sellers are shying away from putting homes on the market, a survey showed.

Persimmon’s results come days after The Times reported that the government may ban the company from using a Help to Buy public funding scheme for new home buyers when it is extended from 2021. Ministers are concerned about using taxpayer money to support the company after receiving complaints about the quality of its construction and its sale of homes on expensive leases, the newspaper said.

Britain's housing minister, James Brokenshire, has been pressing Persimmon on how it operates within the Help to Buy public funding scheme.

The company, which sold 7,970 homes under the scheme, up from 7,682 in 2017, had not had any "direct communications with the government" on the issues raised, Mr Jenkinson told analysts.

"The group's relatively poor record on customer satisfaction has come under increased scrutiny and we expect Dave Jenkinson ... to invest more in build quality over the next few years," Peel Hunt analysts said.

Help to Buy accounts for about half of Persimmon’s sales and selling homes built on cheap land to buyers benefiting from the interest-free loans that helped the company achieve record margins, according to Bloomberg.

The profit on each home Persimmon sells has almost tripled since 2013, the year the government programme was introduced.

Updated: February 27, 2019 08:54 AM

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