Persimmon may consider acquisitions after profit growth — March 1, 2010

This week is set to be the week that Persimmon Homes announce just how good a recovery they have had from their financial difficulties of the past couple of years. The housing giant is expected to reveal profits of around £60million, in stark contrast to the fortunes of some home builders.

Persimmon managed last year to reduce its debt from a massive £900million to under £300million and it expects to be in a position to clear the debt come 2011.

The turnaround has prompted those in the housing industry to raise the question of acquisitions. Other home builders have struggled in the economic downturn and it is likely that Persimmon will consider expanding and acquiring other companies in light of its recovery.

Bovis is a possible target and Taylor Wimpey has certainly struggled, but Persimmon’s spokespeople have suggested that they will remain cautious over the next year as the housing sector continues to demonstrate an uncertain immediate future. Redrow and Barratt have been growing slowly over the last few months, reducing their losses significantly as pressures finally begin to ease and the housing market gets back on its feet.

Any move by Persimmon to acquire other businesses wouldn’t come as a surprise despite the company’s reticence on the matter.