Persimmon finds North ‘most challenging’

House-builder Persimmon said prices are stabilising in the region as it concentrates on improving margins and a cautious return to new developments.

The north division completed 2,144 homes in 2009 compared to 2,753 in 2008. The company, which announced its full year results to the end of 2009 today, said the North was the hardest trading area and "particularly in Scotland and the North West."

The results statement continued: "It has taken time to recover and for prices to stabilise [in the North]. We have already seen some recovery in the market with this division completing 1,192 homes in the second half, a 25% increase from the first half's performance."

Average selling prices in the North declined to £151,462 across the 12 months (2008: £172,160). This was mainly due to a change in housing mix with more apartments completed in the first half. However, prices for the second half rose 6% to £155,195 and there were "signs of underlying price growth in the last quarter".

Group sales for the year were £1.42bn (2008: £1.76bn) and pre-tax profit was £7m, down from £126.6m in 2008. Net debt at year end stood at £267.5m (2008: £600.7m) and well within the £1bn bank facility arranged in March 2009.

Operating margin for the year was 4%, although the second half saw an improvement to 6%.

John White, group chairman, said: "Our cash generation and cost control have placed the business in a strong position both operationally and financially for a recovering market. Prices have held firm since the beginning of the year and we remain focused on improving our operating margins to profitably grow the business."

Persimmon covers the North West from bases in Urmston and Lancaster.

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