Persimmon Plc reports strong H1, FY completions expected at top end of guidance

Persimmon Plc (LON:PSN) has announced its half year results for the six months ended 30 June 2024.

Financial highlights

Operational highlights

·    4,445 new home completions in H1, up 5%, including a 14% increase in private completions to 3,742 homes; on track for completions of c.10,500 for the full year, at the top end of previous guidance.

·     Underlying operating profit and margin in line with expectations, impacted by embedded build cost inflation and private sales mix in the forward order book at the start of the year, as expected.

·    Net private sales rate of 0.71 per outlet per week up from 0.59 in H1 2023. Excluding bulk sales, net private sales rate of 0.59, up 5% (2023: 0.56) on the prior year reflecting improvement in the Spring selling season.

·    Maintained five-star customer satisfaction for third successive year alongside further improvements to build quality, achieving more than double the number of NHBC Pride in the Job awards than in 2023.

·     Continuing to invest in future growth through £195m spend on land in H1.

·     Achieved detailed planning on c.6,000 plots year to date (135% of H1 completions). Encouragingly, c.1,000 of these were achieved in July following the new government taking office.

·    Our landbank is strong with 81,545 plots owned and under control, of which 38,067 are owned with detailed planning, supporting our ambition to grow outlets; up 3% from the start of the year to 266 at 30 June.

·      Current private forward order book up 28% year on year to £1.12bn.

·      Prototype house with facade built in 5 days at our Space4 factory.

Current trading and outlook

We are encouraged by the early announcements of the new government, particularly around planning. Consumer confidence continues to improve leading to a strong pick up in enquiries and visitors, which will be further supported by the recent cut to the Bank of England base rate. Since 1 July, our net private sales rate is 0.69 which is up 68% on last year, providing us with good confidence on delivering c.10,500 homes for the full year, at the top end of previous guidance and we continue to expect our full year housing margin to be in line with the prior year. Our current private forward order book² is up 28% at £1.12bn, with a private ASP of c.£289,150, up 2% on the prior year.

Our recent successes on planning, combined with our continued activity in the land market over the past 12 months has further strengthened our land bank and provides us with confidence for further growth of outlets and volume into 2025. Although we recognise that the government’s welcome planning reforms will take some time to come through, our ambition remains to grow our outlet base to over 300 in the medium-term.

Dean Finch, Group Chief Executive, said:

“Persimmon is a growing company with growing opportunities. The first half of the year has been strong with improved sales rates and robust average selling prices, despite ongoing affordability challenges. Strengthening consumer sentiment, improving macro-economic conditions and the government’s welcome and ambitious planning reforms that demand more of the high quality, affordable homes that are Persimmon’s core strength, are all supportive of our ambition to grow this year and in the future.

We are opening more sites this year and will do the same next year, demonstrating the benefit of our continued land investment in recent years. This growing and strong platform means we are ready to deliver more of the homes our country requires while securing industry-leading returns over the medium-term.”

Footnotes

1      Stated before net exceptional charge of £2.0m (2023: £nil), as set out in note 4 and goodwill impairment (2024: £0.9m, 2023: £5.8m). Margin based on new housing revenue (2024: £1.17bn, 2023: £1.09bn).

2      2024 figure as at 4 August 2024; 2023 figure as at 6 August 2023.

There will be an analyst and investor presentation at 09.00 today, hosted by Dean Finch, Group Chief Executive and Andrew Duxbury, Chief Financial Officer.

Analysts unable to attend in person may listen live via webcast using the link below. All participants must pre-register to join the webcast. Once registered, an email will be sent with important details for this event, as well as a unique Registrant ID. This ID is to be kept confidential and not shared with other participants.

Live webcast: https://edge.media-server.com/mmc/p/f4d8srd7/

An archived webcast of today’s analyst presentation will be available from this afternoon on www.persimmonhomes.com/corporate.