British house builder Persimmon
The largest UK housebuilder by market value said on Monday tighter cost control and sales on higher margin land meant it expects underlying operating margin for the year to be around 10 percent. Revenue for the year to December 31 was 1.53 billion pounds.
Analysts on average are expecting a full-year group pretax profit of 139.78 million pounds according to Thomson Reuters I/B/E/S from a range of 128 million to 160.94 million pounds.
Shares in the FTSE 250 firm were up 1.9 percent to 490.7 pence at 0904 GMT.
The group said that while the general economic backdrop to the UK housing market remained challenging it had seen encouraging visitor levels, sales reservations and stable prices. Forward sales stood at 615 million pounds compared to 565 million in 2010, leaving it well placed for 2012.
We will continue to focus on our operating margins as we start new sites. We've started 25 new sites in the last quarter and are scheduled to start another 60 sites in the first six months of this year, Persimmon Chief Executive Mike Farley told Reuters.
Those sites will probably be on newly acquired land and will have higher margins on them. I think in this environment we can still look to grow our profitability even on fairly stable market conditions.
Persimmon completed 9,360 homes in the period, in line with the previous year. Its average selling price stood at 164,000 pounds, down 2 percent on the previous year, due to the rise in the number of first time buyers aided by the government's FirstBuy shared equity scheme.
Farley said that he expected its average selling price to stabilise this year and that interest from first time buyers was rising. I do think now that the message on FirstBuy is out there with first time buyers and we are getting quite a lot of interest on that front, he said.
The macro position is still challenging and is a constraint to the overall market but I think it is the fact we are dealing with people who need to move, life does go on effectively. People will have those transactions because they are first time buyers who want to live in their own property or people who are trading up.
This comes despite the number of first-time buyers in Britain falling to a record low in 2011, according to mortgage lender Halifax, even though house prices have dropped to their most affordable levels in eight years.
Britain is aiming to kickstart the housing market with a raft of measures such as FirstBuy and a mortgage guarantee scheme.
Panmure Gordon analyst Rachel Waring maintained her Buy rating: Looking into 2012, Persimmon comments that the improvement in sales rates seen in the autumn has continued in the weeks since. This is not only a solid start for Persimmon, but should provide good read across for the other housebuilders.