Persimmon Plc (LON:PSN) has announced its half year results for the six months ended 30 June 2022.
● Strong demand – average private sales rate for the period c.1% ahead year on year, with robust forward sales position and re-iterate guidance of 14,500 -15,000 legal completions this year;
● 6,652 new home completions (2021: 7,406) as Group rebuilds its outlet position;
● Robust financial performance delivering industry-leading margins and ROCE;
● Strong customer service, build quality and efficiency;
● On track to achieve c.10% increase in active outlets by the end of the current year with 60 outlets opened in the period;
● 8,829 plots brought into the business across 37 locations – a replacement rate of over 130%;
● Returned £750m to shareholders by July 2022.
Highlights
| H1 2022 | H1 2021 | |
| New home completions | 6,652 | 7,406 |
| New home average selling price | £245,597 | £236,199 |
| Total Group revenues1 | £1.69bn | £1.84bn |
| New housing gross margin2 | 31.0% | 30.9% |
| Profit before tax | £439.7m | £480.1m |
| Cash at 30 June | £0.78bn | £1.32bn |
| Owned and under control land holdings at 30 June | 89,052 plots | 85,771 plots |
| Current forward sales position | £2.32bn | £2.23bn |
| Capital return (per share) | 125p (April 2022)110p (July 2022) | 125p (March 2021)110p (August 2021) |
Dean Finch, Persimmon Group Chief Executive, said:
“Persimmon continues to perform well. We are making important progress in quality, service, land investment opportunities and efficiencies to build an even stronger business, while continuing to deliver the strong financial returns that Persimmon is renowned for. Demand for our attractively priced, high quality homes has remained robust, with our average private sales rates for the period being c.1% ahead year on year. Our customer satisfaction score3 is currently 92%. We have some exciting new sites coming into the business at industry-leading margins, with a land replacement rate for the period of over 130% and expanded production in our own brick, tile and timber frame factories, is further enhancing our supply resilience and cost efficiency, enabling us to re-iterate our guidance of 14,500 – 15,000 legal completions for the full year.
“We are on track to achieve a c.10% increase in our active outlets by the end of the current year as we work to rebuild our outlet position after a land buying pause three years ago and are tackling the on-going challenges in the planning system. We are stepping up proactive engagement with local authorities, enhancing our approach to developing attractive communities and raising the bar on design to help mitigate planning challenges. We continue to expect our volume delivery to be significantly higher in the second half of the year.
“Our combination of compelling affordability and high levels of service and build quality, coupled with our well-located sites provides a uniquely strong and sustainable customer proposition. It is by strengthening this proposition further that we will achieve our ambition of becoming Britain’s best homebuilder for both customers and shareholders, consistently delivering high quality homes, excellent customer service and industry-leading financial returns.”
Building an even stronger business
Robust first half performance
● Robust first half performance against strong comparator – profit before tax of £439.7m (2021: £480.1m);
● Managing the balance of inflationary pressures effectively – housing gross margin2 up on same period last year (31.0% vs 30.9%);
● Average private sales rate for the period was c.1% ahead year on year;
● Underlying return on average capital employed4 of 30.9% (December 2021: 35.8%) – over the last 3 years the Group’s underlying return on average capital employed has been 34.2% reflecting the sustained success of the business;
● 235p per share paid in respect of the year ended 31 December 2021.
Placing customers at the heart of our business
● Persimmon Way fully embedded across the business and operating well;
● HBF 8-week customer satisfaction score3 currently 92%;
● Trustpilot score5 improved by 30% since the start of the year;
● NHBC Reportable Items6 improved by 25% since December 2020;
● Largest team of independent quality inspectors in the industry providing quality assurance on each of our homes;
● New product range, marketing rebrand and service enhancements are strengthening our offer to customers to meet their aspirations and earn their trust and loyalty;
● Our average private selling price of £267,325 is c.20% below the UK’s national average selling price7, demonstrating the enduring strength of our value offer to customers.
Building a strong platform for success
● High quality land holdings, with 89,052 plots owned and under control at 30 June 2022 (December 2021: 88,043), with a land cost to anticipated revenue ratio8 of 12.2% (December 2021: 11.9%);
● Disciplined land replacement – 8,829 plots brought into the business across 37 locations at industry-leading margins;
● On track to achieve a c.10% increase in our active outlets by the end of the year, with 60 opened in the first half and around 70 forecast to open in the second half of the year, although on-going planning delays continue to present risk;
● Build rates improved by c.10% compared with pre-Covid levels;
● Continuing to invest in our people – around 90% of our site colleagues have achieved a relevant NVQ qualification (December 2020: 21%) and we have been recognised as a Top 100 Apprentice Employer.
Driving value
● BrickWorks, TileWorks and Space4 factories all increasing output, providing supply resilience and efficiency;
● Enhanced data and management tools introduced to drive greater consistency in build times and quality;
● Strengthened centralised procurement driving efficiencies and pooling shared resource to manage supply challenges.
Our communities
● Delivering homes around 30% more energy efficient than existing housing stock making them more cost efficient to run for our customers;
● Invested over £610m in local communities over the last 18 months, delivering 3,632 homes to our housing association partners
● Continuing to protect leaseholders from the cost of cladding removal; five of our developments have secured EWS1 certificates. Proactively engaging with Management Companies and their agents on works required on all other identified developments built by Persimmon.
Outlook
● Demand is strong with the Group’s average private sales rate in the period around 1% ahead year on year and a robust forward order book of £2.32bn;
● Robust start to the second half; average private sales rates for the first seven weeks 11% down year on year against a strong comparator and as we return to a more normal seasonal pattern, and up 8% on 2019 being the most recent, more typical trading year;
● Currently over 90% forward sold for the current year;
● Sales price inflation currently mitigating the cost inflation the industry is experiencing;
● Continue to target around 10% growth in outlets by the end of the current year, with enhanced placemaking and design approach and proactive local authority engagement expected to mitigate on-going planning challenges;
● Re-iterate our guidance of 14,500-15,000 completions for the full year;
● While near term uncertainties continue the longer-term fundamentals remain strong. Our work to become Britain’s best homebuilder will build an even stronger and sustainable business delivering for customers and shareholders alike.
Footnotes
1 The Group’s total revenues include the fair value of consideration received or receivable on the sale of part exchange properties and income from the provision of broadband internet services. Housing revenues are the revenues generated on the sale of newly built residential properties only.
2 Stated on new housing revenues of £1,633.7m (2021: £1,749.3m) and gross profits of £506.2m (2021: £540.5m).
3 The Group participates in a National New Homes Survey, run by the Home Builders Federation. The rating system is based on the number of customers who would recommend their builder to a friend.
4 12 month rolling average calculated on underlying operating profit and total capital employed (including land creditors). Underlying operating profit is stated before goodwill impairment of £5.5m (December 2021: £6.2m).
5 Trustpilot is a digital review platform open to the public. Scores are based on all of the service reviews received on the platform.
6 A Reportable Item is an area of non-compliance with NHBC standards. The item is rectified fully before completion of the home.
7 National average selling price for new build homes sourced from the UK House Price Index as calculated by the Office for National Statistics from data provided by HM Land Registry.
8 Land cost value for the plot divided by the anticipated future revenue of the new home sold.
There will be an analyst and investor presentation at 09.00 today, hosted by Group Chief Executive, Dean Finch and Chief Financial Officer, Jason Windsor.
Analysts unable to attend in person may listen live via conference call by registering using the link below:
https://register.vevent.com/register/BIeec490705a9148279d0424360eec3206
The presentation can be viewed via the webcast using the link below:
https://edge.media-server.com/mmc/p/x3tot3oz
An archived webcast of today’s analyst presentation will be available on www.persimmonhomes.com/corporate from this afternoon.
