York-based Persimmon Homes has beaten rival Bovis – which reported yesterday – by reinstating its shareholder dividend. Persimmon posted strong first-half results with a profit of £39.4m compared with a loss for the same period last year of £16.7m. It completed 4,657 new homes – up 16% – at an average selling price of £168,900, up 8%.
On the back of these results, the firm has announced a £70m writeback on a 2009 writedown, and the reintroduction of a 3p half-year dividend. In doing so it has stolen a march on Bovis, whose results yesterday were rather less positive.
Bovis scraped a first-half profit of £3.5m, albeit a lot better than last year’s £8.6m loss and could only talk of ‘possibly’ restoring its dividend at the end of the year, bar market deterioration.
Meanwhile, new figures out from the British Bankers Association suggested that the demand for mortgages remains subdued. In July, 33,698 new home loans were approved, down 877 from the previous month as the summer lull in the already shaky property market took hold. The figures compare with the recent high in loans of 45,415 in last December.
So the question for housebuilders like Persimmon and Bovis is whether the traditional seasonal autumn up-tick in activity will emerge this year, and to what extent. Bovis chief exec David Ritchie is pretty cautious on this, saying that the firm assumes there will be a period of ‘stability, you might even say stagnation’ ahead. Doesn’t sound like there’s really much chance of Bovis shareholders seeing that divvy again just yet, does it?
Persimmon chairman John White was slightly more glass-half-full, saying ‘While we remain cautious, we are optimistic about the future of our business.’ Hardly unqualified exuberance, but in the circumstances who can blame him? In reality both firms are trying to prepare their investors for what looks like a long and bumpy road to recovery, but doing it in slightly different ways. Bovis is saying effectively ‘Times are hard but this is a good business. Stick with us and we’ll get there in the end.’
Persimmon’s message is broadly the same, except that it has craftily managed to sweeten the pill with that 3p dividend. That may not be much, but its more than a lot of building industry investors have seen recently.
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