Persimmon’s revenue tanks 32% in the first half as COVID-19 halts construction activities

Persimmon’s revenue tanks 32% in the first half as COVID-19 halts construction activities
Written by:
Wajeeh Khan
9th July, 09:49
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Persimmon plc (LON: PSN) said on Thursday that its revenue in the first half (H1) of the ongoing financial year came in 32% lower. The British housebuilder attributed the decline to the Coronavirus pandemic that brought construction activities to a near halt in recent months and delayed deliveries. Since it returned to work last month as the government eased COVID-19 restrictions, however, it expressed confidence that reservations were recovering quickly.

Shares of the company opened roughly 4% up on Thursday and jumped another 1% on market open. At £25.61 per share, Persimmon is currently about 6% down year to date in the stock market after recovering from an even lower £15.34 per share in March. Learn more about how to invest in the stock market.

Persimmon appoints Dean Finch as its new CEO

At £1.19 billion, the 2nd largest British homebuilder’s revenue came in significantly lower in the six months that ended on 30th June as compared to £1.75 billion in the same period last year. Legal completions, it added, dropped from 7,584 last year to 4,900 in H1.

The average selling price, however, saw an increase to £225K in the first half versus the year-ago figure of £216K. Persimmon appointed the head of National Express, Dean Finch, as its CEO in June.

On a year over year basis, the York-based company reported a 15% increase in sales as of 30th June. In the final 6 weeks of its first half, Persimmon saw a 30% annualized increase in net reservations. The firm jumped 6% in the stock market last week on reports of stamp duty cut.

In terms of liquidity, the FTSE 100-listed firm said it had £830 million in cash and an additional £120 million in deferred land commitments. Persimmon’s undrawn revolving credit line is currently valued at £300 million.

Persimmon to re-evaluate 2019 final dividend in H2

The homebuilder expressed confidence for the second half on Thursday as it valued its forward order book at £1.86 billion that represents a 15% increase on the previous year. Cancellation levels, it highlighted, matched historic trends at the end of the first half. Persimmon had postponed its 2019 final dividend in the wake of COVID-19. On Thursday, it expressed plans of re-evaluating the dividend in the second half.

All in all, the housebuilding company was confident that it can survive the economic blow from the Coronavirus pandemic. At the time of writing, Persimmon has a market cap of £8.17 billion and a price to earnings ratio of 9.62.

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