Sunday, January 13, 2019

Can persimmon build a better reputation? | business



When the racehorse Persimmon retired in 1897, the brilliant thoroughbred of the future Edward VII was packed after Sandringham. His cover money was 300 guineas a pop.


That's about £ 40,000 per experiment for today's money, which instinctively feels like decent work, if you can get it. This, of course, is until your thoughts turn to Nags' namesake - the house-builder Persimmon - in which City's former chief executive Jeff Fairburn claimed he had £ 75 million to do a similar job on behalf of the company sacrificed.







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Of course, Fairburn spent most of 2018 trying out optimistic defenses for his grotesque paycheck. One of his better tears was that the figure was "in line with accepted practice."


It was an ambitious line to deliver with a straight face - all the more so as Chairman Nicholas Wrigley and Persimmon Compensation Committee Chairman Jonathan Davie both ceased the scandal. Fairburn then had to hobble and courageously made his own runner of one BBC Look North Interviewer, who in turn accelerated the retirement of the executive.


This brings us to this week and the Persimmon Trading Statement - the first since the former Chief Executive in November and the first in more than a year that is not about Fairburn's package.


Analysts from online stockbroker The Share Center put it this way: "The media focus will now focus on the performance of the group and not on the salary package of the previous CEO. Shares were canceled early in 2019 as Taylor Wimpey reported a relatively positive update for the year through 2018, while the outlook for 2019 remained robust despite the political and macroeconomic backdrop. Investors will be looking for comments on the potential impact of Brexit and whether labor and material costs are higher. "




Jeff Fairburn.




Jeff Fairburn. Photo: Persimmon / PA

Surely Persimmon will hope that this could be the moment Fairburn is finally snatched out of the company's stables. The story suggests there are worse points in the calendar to try this trick.


This week's statement coincidentally comes at a traditionally favorable time for home builders - with the first quarter often turning out to be a period in which the sector is considered decent.


The share of house builders tends to increase between January and March as the news flow goes towards the all-important spring season. This, in turn, is attracting investors' attention and companies seem to be able to find buyers for homes and stocks.


In four of five years, the share of persimmon increased between January and March. Granted, last year was the exception, and maybe this is not the time to apply long-term trends safely.


However, if you need to start rebuilding Persimmon's reputation in the midst of a national maelstrom, you can do likewise in January, especially as the Brexit drawback is known and partially priced in.


In a note that outlined the sector's outlook for 2019 in December and was published by financial services firm Canaccord Genuity, it says: "In this sector, house prices will generally have fallen by 5% and actual prices will have fallen by 10%. If the result for 2019 is at or near the current consensus expectations, we would expect a significant increase in value. "


Translating it from jargon into English means that if Brexit is not so bad, persimmon could pay someone a big payday. Once again.




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