Persimmon eyes full recovery next year after 2020 profit slump

FILE PHOTO: Builders construct modular Space4 homes on a Persimmon development in Coventry
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(Reuters) - Britain's second-largest homebuilder Persimmon on Wednesday said it was targeting a full return to pre-pandemic new home completion levels next year as it reported a 25% slump in annual pre-tax profit.

Persimmon, which had flagged risks to its construction sites from the new coronavirus variant and the ongoing lockdowns, said it recorded strong forward sales of 2.3 billion pounds ($3.21 billion), 15% higher than a year earlier.

It said average private weekly sales rate per site for 2020 was 12% higher year-on-year, reflecting good stock availability coming into the year and strong customer demand. Over the first eight weeks of this year, the rate was 7% above year-ago levels.

Mortgage lender Nationwide said on Tuesday the outlook for the housing sector was particularly uncertain right now and cautioned it could slow because of a weakening labour market.

Persimmon, however, said long-term fundamentals of the UK housing market remained strong, though it stopped short of providing an outlook for 2021. Its bigger rival Barratt Developments and No.3 player Taylor Wimpey both have forecast strong market activity this year.

Housing demand had rebounded in mid-2020 from initial coronavirus curbs, helped by stamp duty relief, low interest rates and consumers seeking bigger homes to meet the demands of remote work during the pandemic.

Britain is set to extend a stamp duty break by three months and unveil a mortgage guarantee scheme in the budget announcement later in the day, moves that would bolster the sector after Prime Minister Boris Johnson mapped an exit plan from lockdowns.

The FTSE 100 firm's pre-tax profit came in at 783.8 million pounds for the year ended Dec. 31, 2020, compared with 1.04 billion profit in 2019.

($1 = 0.7167 pounds)

(Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Tomasz Janowski)