UK construction firms are suffering their longest downturn since just before the pandemic after a fresh slump in housebuilding https://t.co/FCcjvO0JWv ...

Core Viewpoint - Shares in FTSE 100-listed Persimmon fell 2.7% despite reporting an increase in sales and profits for the first half of the year [2] Financial Performance - Housing revenues increased by 12% to £1.31 billion in the first half of the year [2] - Total completions rose by 4% to 4,605 homes, with average selling prices up by 8% to £284,047 [2] - Underlying operating profit improved by 13% to £172 million, driven by increased volume and operational discipline [4] - Pre-tax profit remained flat year on year at £146.7 million [4] - Statutory revenues rose by 12% year on year to £1.5 billion [4] Market Conditions - The company noted improvements in buyer affordability due to interest rate cuts, looser lending rules, and real term pay rises [3] - However, these improvements were offset by increases in council tax, national insurance, stamp duty, and energy bills, along with macroeconomic uncertainty affecting consumer sentiment [4] Sales and Completions Outlook - The firm is on track to achieve total completions of 11,000-11,500 properties for the full year and 12,000 in 2026 [3] - The private sales rate (excluding bulk sales) increased to 0.62 from 0.59 in the first half of 2024 [4] - Net private sales in the five weeks since the end of June rose to 0.61, up from 0.55 in the same period of 2024 [7] Order Book and Future Positioning - The private forward order book increased by 11% year on year to £1.25 billion, with an average sales price of £292,800, up 1.3% year on year [8] - Including partnerships, the order book is 9% higher at £1.86 billion [8] - The company is approximately 80% secured on private completions and fully secured on partnerships completions for the full year [8] Analyst Commentary - Analysts noted that Persimmon is making steady progress despite affordability pressures and macroeconomic uncertainty [8] - Vertical integration, increased in-house production, and targeted incentives are helping to protect margins [8]

Industry Performance - UK construction firms experienced the sharpest output plunge in over five years [1] - The decline was driven by a slump in housebuilding [1]

Core Viewpoint - Barratt Redrow shares experienced a significant decline due to warnings about legacy issues impacting profits and lower-than-expected home completions [2][4] Financial Performance - The company expects to incur additional legacy property liabilities of £248 million, with £98 million related to fire safety and reinforced concrete frame issues [3] - Adjusted pre-tax profit is predicted to meet market expectations after stripping out these adjustments [3] - Cost synergies of £69 million have been achieved from the Redrow acquisition, with a target of total savings of £100 million [3] Completions and Forecast - Total home completions for the year were 16,565, down from 17,972 in the previous year and below the forecast of 16,800-17,200 [4] - For the current financial year, total completions are projected to be between 17,200 and 17,800, including 600 from joint ventures [5] - The medium-term target remains at 22,000 completions per year [5] Cash Position and Share Repurchase - The company ended financial 2026 with net cash of £772 million, a decrease from £868.5 million in the prior period but above expectations [5] - Plans to repurchase up to £100 million of shares by the end of the current financial year have been announced [5] Market Outlook - The CEO noted a solid performance despite a challenging market, with adjusted profits aligning with market expectations [6] - There is a long-term structural under-supply of housing in the UK, which may support future demand [7] - Analysts have mixed views, with some noting that sales rates are improving despite hurdles like increased stamp duty and slow planning approvals [8]