The second biggest housebuilder by output in the UK, Persimmon, says it remains confident in its ability to deliver a long term dividend programme, despite Britain’s vote to leave the European Union sparking worries throughout the sector.
However, as investors become more and more pessimistic about the future of property in the UK, its shares sold off by 7.2% on Tuesday, in line with its peers.
In a trading update, the group said: “We remain confident in our ability to deliver the capital return plan to our shareholders,” in reference to a planned 10 year pay-out plan of £2.76 billion having reported a 12% earnings increase in the first six months of this year.
Since the referendum, the firm has offered little trading guidance, but chief executive, Jeff Fairburn, said: “The market is still there — people are still buying. Our net sales were in line with the previous few weeks’ trading.”
Despite an index earlier in the week showing that UK construction dropped overall in June to its lowest level in seven years (partly because of a decline in housebuilding), Fairburn insisted that the group has not reduced its construction rates.
Compared with May and June last year, Persimmon states that private sales are up by 1%, which once again defies a broader slowdown in the housing market in the time prior to the EU referendum.
Revenues increased by 12% to £1.5 billion, while new homes being complete rose by 6% from the previous year to 7,238 and selling prices also increased by 6% to £205,500.
Now, the group expects its operating margin to be even higher than last year’s 23%, while its share price had outperformed rival firms in 2016 prior to the referendum, partly because of a major increase in its dividend pay-out plan which was announced earlier in the year.