Persimmon confident despite challenging market conditions

Persimmon expects to announce a strong set of results for 2007, according to a trading update out today.

The housebuilder said it "will deliver an increase in profit before tax for 2007 in line with the mid range of analyst expections". Its preliminary results to 31 December 2007 will be announced on Tuesday 26 February.

Despite experiencing more challenging trading conditions in the second half of 2007, Persimmon said it had improved operating margins for the year through a combination of tight cost control, the delivery of further synergy savings from the Westbury acquisition and the benefits emerging from the successful development of its strategic land portfolio.

Lower consumer confidence and the impact of the credit crunch reduced activity in the important autumn period, leading to a 5% reduction in completions during 2007 to 15,905 (2006: 16,701).

However, Persimmon said that sales prices remained resilient despite increases in incentives and marketing costs. The underlying price growth for homes was approximately 3%. The average selling price increased to £189,558 (2006: £188,129).

The total landbank remains similar to 2006 at 79,000 plots (2006: 80,085).

Forward sales into 2008 have been affected by market uncertainties dropping to £603m compared with £701m in December 2006.