Persimmon pays £750m dividend amid £967m profit

York-based house building giant Persimmon plc said on Wednesday its profit before tax increased 23% to £966.8 million in the year to December 31, 2021 and revenue rose 8% to £3.61 billion.

Dividends paid to shareholders totaled £749.6 million.

The total anticipated distributions to shareholders is 235p per share (2020: 235p per share) in respect of the financial year ended 31 December 2021,” said Persimmon.

The group sold 14,551 homes in the year, a rise of 7.2%, with selling prices averaging 2.8% higher at £237,000, about 20% below the national average.

Persimmon reported a forward sales position of £2.21 billion.

Steve Clayton, fund manager at HL Select, said: “Persimmon have set a lot of concerns to rest with these numbers.

“Fears that volumes would be held back in 2022 are eased by news that the group has upped its rate of land-buying significantly in the latter part of 2021 and will now see a large number of new sites opening in the first half of the year.

“Margins pushed ahead, despite cost pressures and the group are indicating that the higher margins will remain.

“Rising capacity in their own brick and tile manufacturing plants will help the group keep costs under control, and an average selling price far below national averages gives scope to edge prices higher to accommodate cost increases, without losing competitiveness.

“With margins so strong, the group continues to generate cash and has confirmed plans to distribute another 235p to shareholders, with the first 125p coming to holders on 1 April, with the remaining 110p expected in July.

“That puts the group onto a yield of almost 10%, and with almost £1.25bn of cash in the bank, the group looks strongly capitalised.

“This is all solid stuff from Persimmon, but in truth, much was already known and a lot of the rest was expected.

“What the group have done is to soothe concerns, but they have not pulled a rabbit from the hat.

“That probably explains the markets initial, rather dismissive reaction to the figures.

“But if Persimmon can keep grinding out numbers like these, year after year, then shareholders will be amply rewarded through dividends.”

Persimmon CEO Dean Finch said: “Persimmon’s performance was strong in 2021 as we delivered more homes, built better and strengthened our platform for future growth.

“Maintaining build rates at pre-Covid levels, we delivered almost 1,000 additional new homes, and improved customer service such that we anticipate receiving a five-star rating in the annual HBF survey later in March 2022, a first in the company’s history, whilst also improving our underlying operating margin.

“An agile approach across the business ensured we navigated the supply chain challenges posed by the pandemic, with our Brickworks, Tileworks and Space4 manufacturing facilities providing security of supply for essential materials and helping us maintain our operating efficiency.

“We will significantly expand production capacity at our Brickworks and Tileworks facilities this year and invest in a new Space4 timber frame facility.

“We are taking advantage of exciting opportunities in the land market, bringing in over 20,750 plots into our business last year at industry-leading embedded margins, and we expect to open around 75 new outlets in the first half of 2022.

“A year ago, we adopted an industry-leading position regarding the remediation of all cladding and fire related defects on a small number of buildings developed by Persimmon over the last 30 years, which is consistent with the recent amendments to the Building Safety Bill.

“We await further details including any widening in scope of those developments brought within the Building Safety Levy.

“The new year’s trading has started well, with private sales rates ahead by c. 2% in the opening weeks and a robust forward sales position of £2.21bn.

“We expect to grow our outlet position in 2022 and are targeting volume growth of 4-7% on 2021 levels, whilst maintaining our industry-leading margins, although we are mindful of the growing risk of an economic impact as a result of the tragic conflict in Ukraine.”