Persimmon sales drop despite boom in demand in last six months of 2020

Housebuilder Persimmon said it sold almost a third more homes in the second half of 2020 compared with a year earlier as the Government’s stamp duty holiday boosted demand.

Weekly sales were 39% up year-on-year, the company revealed on Wednesday, but this was not enough to offset the major hit that sales took in the first half of the year.

Total revenue dropped nearly 9%, from £3.65 billion to £3.33 billion, between 2019 and last year, Persimmon said, and the number of homes it built fell from 15,855 to 13,575.

“Against the backdrop of the unprecedented challenges of 2020, Persimmon produced a robust performance for the year, as we continued to deliver the new homes the country needs,” said chief executive Dean Finch.

“The group’s strong second half completions were supported by its advanced build coming into the year, an agile and effective response to the Covid-19 pandemic and resilient customer demand.”

Despite what analysts said was a fairly unsurprising update from Persimmon, its shares had dropped by 4.5% a couple of hours after markets opened in London.

“The slide probably reflects investors’ concerns over the current state of the pandemic and how it could impact near-term demand, the fast-approaching expiry of the Government’s stamp duty holiday and – just as importantly – the valuation of the stock,” said Russ Mould, investment director at AJ Bell.

Persimmon echoed some of Mr Mould’s words, saying it is “mindful of the potential impact of an end to the stamp duty holiday”.

The business said tighter pandemic restrictions mean uncertainties remain about the impact Covid-19 will have on business. In particular, Persimmon said unemployment levels and consumer confidence could change.

Persimmon said it had claimed no support from Government Covid-19 relief schemes, and has no plan to do so.

“Recent events have served to further demonstrate the continuing near-term uncertainties arising from the Covid-19 pandemic,” said Mr Finch.

“However, we believe that the longer term fundamentals of the UK housing market remain resilient and I am confident Persimmon will continue to deliver superior long-term value for all of its stakeholders.”