Underlying profit before tax rose 13% to £1.1bn in 2018, thanks to higher completions and improved margins.
2018's shareholder returns were 235p per share, a 74% increase on last year.
The group also announced interim CEO, Dave Jenkinson, has been appointed Group Chief Executive, following Jeff Fairburn's departure in November.
Shares rose 1.5% in early trading.
A few warning signs are flashing in the housing market, but the government's 'Help to Buy' incentives are providing an extra tailwind to the builders. As a result, Persimmon is bucking the trend with strong sales and high levels of interest.
Many of the schemes are designed to encourage the purchase of new builds, and close to 50% of Persimmon's buyers benefitted from Help to Buy. This, plus a structural housing shortage tips the supply/demand equation in the builders' favour. And low interest rates and unemployment levels provide a generally supportive backdrop.
Add in the group's enviable operational record - margins have topped 30% - and it's easy to see why the shares trade on 2.3 times book value, a premium to its housing peers.
But sands are shifting. Help to Buy is set to run to 2023, but Persimmon's participation in the scheme is facing scrutiny. The government is said to be concerned about its use of controversial leasing fees, and poor quality builds. We'd be surprised if Persimmon was prematurely taken off the Help to Buy list, but with wider economic uncertainty looming, it's a worry it could do without.
Brexit remains the main worry. Concerns have already seen prices stagnate and transactions slow. Those trends could worsen in a harsh Brexit, and if that's the case, it's hard to see the builders' profits being sustained.
Perhaps mindful of how its debt-laden balance sheet exacerbated troubles back in 2008/9, management have ensured its foundations are strong. Persimmon has a deep land bank for future development and has built up a huge net cash position.
That means the group can return most of its free cash flow straight to shareholders through special dividends. We think this policy, rather than stock repurchases or M&A, was the right call.
Those extra dividends also mean the shares yield 10%. Attractive, especially since the payments look secure in the short term.
Investors shouldn't extrapolate the dividend too far into the future though. Support from Help to Buy and low interest rates won't be around forever. Persimmon's doing very well with what is has, but time will tell what Brexit means for the housing market.
Group revenue increased 4% to £3.74bn, with completions up 2.5% to 16,449 and average prices up 1% to £215,563. That includes a change of mix, which saw fewer larger homes being built.
Underlying operating margins rose to 30.8%, from 28.2% last year, following the use of new build efficiencies.
Forward sales were broadly flat with last year, at £2.02bn. Spring sales rates are lower than at this time last year, but with a higher proportion of releases due later in 2019, the group's confident of hitting this year's targets. However, it remains mindful of Brexit uncertainty.
Persimmon acquired 17,092 plots of land, across 84 locations. The number of plots with planning permission stands at 47,300 - a 10% decrease on last year.
A higher dividend, and the timing of payments to suppliers meant net cash decreased slightly to £1.1bn (2017:£1.3bn), however land creditor obligations decreased by £19.3m.
An interim dividend of 125p will be paid on 29 March, to those holding shares on the 8 March. A final dividend of 110p will be paid on 9 July, to those on the register on 14 June.
Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by Thomson Reuters. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.
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