Persimmon back in profit....

HAMISH_MCTAVISH

Persimmon helped to restore confidence in the housing market yesterday as it moved back into the black with a £78 million pre-tax profit.

The housebuilder, which recorded a £780 million loss in 2008, said that rebounds in demand and in prices in the second half of last year were responsible for the improvement in its full-year figures, partly reversing the sluggish start to 2009. Forward sales of homes were equal to £900 million, a 29 per cent increase on their value in 2008.

It added that sales and prices had continued to rise in the first eight weeks of this year, despite the dip in activity recorded in recent weeks by official measures, showing falls in mortgage approvals, sales and prices in January.

Mike Farley, Persimmon’s chief executive, said that prices of the company’s homes, which are weighted towards houses rather than apartments, had held up, rising by 1 per cent in January and February, while sales were up 7 per cent on the same period last year. Mr Farley said that he expected prices to rise by between 2 per cent and 3 per cent over 2010.

Yet more confirmation of the recovery continuing apace.

1984ReturnsForReal_2

Mark up on property & land stock.........

Graham_Devon

Right where Hamish stops quoting...

Heres the real reason

Much of the profit was attributed to restructuring — operating expenses were 14 per cent lower than in 2008. Revenue was down from £1.76 billion in 2008 to £1.42 billion, and completions fell from 10,202 to 8,976. The average sale price in 2009 was £160,513, down from £172,994 in 2008. However, net debt levels were reduced from £600 million to £267 million, while cashflow rose to £357 million from £239 million in 2008.

Revenue down.
Completions down.
Prices down.

Hamish calls this more confirmation of the recovery.

HAMISH_MCTAVISH

Graham_Devon wrote: »

Revenue down.
Completions down.
Prices down.

Rebounds in demand and in prices in the second half of last year were responsible for the improvement in its full-year figures.

Prices of the company’s homes had held up, rising by 1 per cent in January and February, while sales were up 7 per cent on the same period last year.

Demand Up.
Prices Up.
Sales Up.

Graham_Devon

Get a grip.

googler

If their loss in 2008 was £780 million, and they're recording a profit of only 1/10th of this, don't we need to know over what period they made this profit to judge how successful it is against 2008's figure....?

and doesn't this indicate they've still to make a profit equal to the other 9/10ths to get back to where they were in 2007 ?

Pobby

Yawn...................................................................................................................................................................................................................................................................................................................................................

ManAtHome

googler wrote: »

and doesn't this indicate they've still to make a profit equal to the other 9/10ths to get back to where they were in 2007 ?

Nope - you're not allowing for Troosernomics!

For example, the economy has 'recovered' by £4bn following a drop of £80bn+ and invented money of £180bn+, so apparently (4 - (80 + 180)) equals something positive.

Maybe I have the brackets in the wrong place..?

HAMISH_MCTAVISH

googler wrote: »

to get back to where they were in 2007 ?

Who cares?

They've gone from loss to profit.

On the back of increasing sales, prices, and demand.

Rome was not built in a day, and recovery does not happen overnight.

It may take years to get back to 2007 levels of transactions (and thus profits). But that does not mean we are not recovering.

smamst

HAMISH_MCTAVISH wrote: »

It may take years to get back to 2007 levels of transactions (and thus profits). But that does not mean we are not recovering.

It takes years to make a profit, hard earned profit.

It only takes a day to wipe out those profits and turn them into loses.

It takes a Labour government to bail out those loses using our money.

Money grows on trees, we will all be saved.

Generali

Basically the entire profit is made up of the revaluation back up of land that was valued down last year. The downward valuation of the land was responsible for the majority of the loss the previous year.

Their debt figures are highly encouraging given the ongoing problems in the credit markets, a company that is generating cash and operating with low levels of debt is pretty attractive I reckon. I'd buy the shares from what I read in the article. I'm not convinced that means that the UK is about to march into the sunlit uplands of economic prosperity though.