Aug 10 (Reuters) - Persimmon on Thursday became the latest British housebuilder to flag affordability concerns from higher mortgage rates, but forecast annual profit in line with its expectations, sending its shares over 2% higher in early trade.
Britain's housing market has slowed in recent months against the backdrop of the Bank of England's sustained run of interest rate rises since December 2021 aimed at taming persistent inflation.
The FTSE 100 builder did not provide an outlook figure but the market is predicting a more than 65% slump in annual operating profit, according to a company-compiled median analysts' consensus estimate of 348 million pounds.
"While there are potential signs of some mortgage rates reducing from recent highs, market volatility is likely to continue and affordability concerns remain," the company said in a statement, adding it remained "on track" to deliver its profit expectations for the year.
The group's order book - a key metric that gauges short-term sales performance - declined 30% from a year ago to 1.6 billion pounds, compared with 2.2 billion pounds in 2022.
"As we have seen elsewhere, trading conditions have waned over the last 4-6 weeks with sales rates falling to 0.41. Pricing appears to remain resilient, but the next big test for the market will be the autumn selling season," said Investec analyst Aynsley Lammin in a note.
The proportion of sales to first-time buyers fell to 34% in the half-year period, compared with 42% year ago, the company said.
However, it reiterated its home build target of around 9,000 for this fiscal year.
Persimmon's underlying operating profit for the six months ended June 30 was 152.2 million pounds ($193.7 million), down from 440.7 million pounds.
Persimmon said it has undertaken a review focused on cost savings, including a group-wide recruitment freeze which saw headcount reduce by nearly 300 in the half-year and forecast 25 million pounds annualised savings from an overheads review.
($1 = 0.7857 pounds)
Reporting by Aby Jose Koilparambil in Bengaluru and Suban Abdulla in London; Editing by Dhanya Ann Thoppil, Kate Holton and David Evans
Source: Reuters