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UK builder Persimmon 1H profits down 87 pct

UK builder Persimmon 1H profits down 87 pct

Persimmon PLC, Britain's biggest homebuilder, said Thursday its first half profits plunged 87 percent after banks approved fewer mortgages and Britain suffered a housing crash.
Net profit fell to just 26.4 million pounds (US$49.3 million) in the first six months of the year, down from 196.6 million pounds (US$367.3 million) over the same period last year.
Revenue for the first-half dropped 34 percent to 998.4 million pounds (US$1.87 billion).
The company said it was hit by the reduction in mortgage lending, caused by the global credit crunch, which resulted in the number of new homes it sold between January and June falling to 5,501, down from 8,002 a year earlier.
Falling house prices across the country _ of around 9 percent year-on-year according to HBOS PLC _ also hit the company's bottom line, with average selling prices slumping 4.1 percent to 181,485 pounds (US$339,093).
To cut costs, Persimmon postponed construction on new sites in April, and announced that it was laying off 1,100 office workers and cutting 900 more construction jobs.
"The business has performed well in very difficult conditions," said chairman John White. "We are confident that our business, having been restructured, is in a strong position to move forward whenever the market improves."
Persimmon was the first publicly traded British construction company to announce its half-year results. But Britain's entire construction industry is suffering from the same problems, leading analysts to anticipate that its bleak figures will be echoed across the sector in the coming months. Bovis Homes and Taylor Wimpey are due to announce their first-half results next week.
Earlier this month, British construction firm Bellway said agreed house sales between January and June of this year had dropped 45 percent compared to the same period in 2007.
Persimmon shares have dived 76 percent in London trading over the last year.
But a trading update the company published in July prepared the market for the negatives published in Thursday's earnings report, and so the company's shares enjoyed a boost in morning trading on the London Stock Exchange.
"The group largely paved the way in managing the market's expectations," said Richard Hunter, equity analyst at Hargreaves Lansdown Stockbrokers. "As such, albeit from a low base, the shares have had something of a relief rally."
The stock was up 11.6 percent at 333 pence (US$6.21) in midmorning trade.


Updated : 2021-05-18 11:12 GMT+08:00