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Peabody sees sales bounce back, but warns of ‘difficult’ trading over rising costs
London giant Peabody has reported a healthy rise in half-year surplus and turnover after its property sales bounced back, but has warned over increasing repairs and maintenance costs.
The 67,732-home landlord, which is due to take on fellow G15 landlord Catalyst as a subsidiary next year, reported a 30% jump in surplus to £87m in the six months to the end of September.
Turnover rose 16% to £346m. The boost was largely due to a bounce back in sales after last year’s pandemic-affected figures, Peabody said.
Income from property sales in the most recent half year jumped 80% to £92m. In the 2019 half year, the figure was £75m.
Peabody did not disclose the split on tenure for sales between shared ownership and market sale or the number of properties sold.
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However, the performance was tempered by a doubling of its cost of sales to £80m, which related to higher land and build expenditure. “We’ve sold homes that incurred higher costs compared to other periods,” a spokesperson said. Peabody also saw a 7% increase in operating costs to £186m.
The landlord’s overall operating margin rose slightly in the period to 36%, compared with 34% last year.
Despite the strong sales figure, Peabody saw a rise in the number of unsold properties on its books. A total of 185 properties remained unsold at the half year, compared with 153 at the same point last year.
The most recent half year included 77 properties that have been available for over six months. At the same point last year, this figure was 58.
Meanwhile 53 properties were recorded as available after being on the market between three and six months, compared with one at the same point in the prior year.
It came as starts in the period more than doubled to 801 homes, while completions were broadly flat at 502.
The spokesperson said: “Turnover from sales and the number of unsold units during a short period of time are largely a function of when homes complete.”
Looking ahead, Eamonn Hughes, chief financial officer at Peabody, said: “We expect the trading environment to become more difficult in the second half of the year as we absorb increasing repairs and maintenance costs, but we have built a strong base level of performance to date and expect full year performance to be in line with budget for key metrics.”
On building safety, the housing association said investment in its stock was a “priority” and that it was “progressing well” despite some labour and materials supply issues.
The spokesperson added: “We have continued to prioritise the safety of our residents by proactively investigating and remediating our highest priority buildings while also maintaining a 95% compliance rate for completing all new fire risk assessments within one month.”
The landlord has spent £84m on fire safety works in the past three full years, its most recent annual report revealed.
On its merger with Catalyst, Peabody said the process remains “on track” to complete next April. Once complete, the merger will create the UK’s second biggest housing association, with around 104,000 homes.
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