TIDMPSN
RNS Number : 1548Z
Persimmon PLC
10 January 2024
10 January 2024
Trading Statement
Persimmon Plc today announces the following update ahead of its
Final Results for the year ended 31 December 2023, which will be
released on 12 March 2024.
Dean Finch, Group Chief Executive, commented:
"Persimmon performed well in challenging market conditions,
delivering completions ahead of expectations in 2023 alongside
enhanced quality metrics of our already five-star homes.
Persimmon's offering is resonating well with customers with sales
rates relatively robust throughout the year. We have successfully
balanced our need to control costs, whilst investing in the
business to position it for sustainable growth when conditions
improve.
"I would like to thank our colleagues, sub-contractors and
suppliers for their commitment and support. Their hard work has
helped ensure that Persimmon remains well positioned to serve
customers across the UK who seek high quality, sustainable homes at
a price they can afford."
Highlights
2023 2022 % change
New home completions 9,922 14,868 -33%
Average selling price c.GBP255,750 GBP248,616 +3%
Average open sales outlets 266 259 +3%
Cash at 31 December GBP420m GBP862m
Current forward sales position GBP1,060m GBP1,040m +2%
Of which private forward sales GBP499m GBP478m +4%
Land holdings (plots owned and
under control) c.82,200 87,190
Trading
The Group successfully navigated challenging market conditions
in 2023 and completed the sale of 9,922 new homes, ahead of
previous guidance, with a particularly strong delivery in Q4. This
was achieved while providing exceptional service to our customers
and we are proud to have maintained our 5-star HBF rating. We have
further improved our quality metrics in the year to what we believe
are our best ever, with a 43% improvement in reportable items per
home in 2023, as measured by the NHBC.
The Group's private average selling price increased by c.5% to
c.GBP285,770 (2022: GBP272,206) which largely reflects the mix of
developments and house types sold. Pricing was firm in the first
half of the year, with some softness and increased use of
incentives experienced during the second half. Overall, incentive
use was c.4% in the year (2022: c.2%). Our partnerships average
selling price increased by 8% to c.GBP152,850 (2022: GBP 142,017)
.
As previously indicated, full year operating margins are
expected to be in line with those delivered in the first half at
c.14%. This reflects the impact of build cost inflation, coupled
with the effects of lower volume, one-off costs associated with the
remediation of a small number of completed sites and accelerated
exit from two sites, along with further investment to position the
business for future success.
Our vertically integrated manufacturing facilities continue to
support delivery and efficiency across the business. Brickworks,
Tileworks and Space4 all performed well, aligning output with the
lower completions in the year and operating with a low level of
fixed costs. We controlled our work in progress closely to match
demand and overall build rates in the year tracked c.28% lower than
the prior year, with an average of 198 equivalent units built per
week (2022: 276).
We saw a sustained pick up in interest in our homes throughout
the year from the lows of Q4 2022, albeit with demand lower than
previous years as a result of high interest rates and the removal
of Help-to-Buy. Overall, average private net sales were 0.58 per
outlet per week for the year (2022: 0.69). This includes a strong
improvement in private net sales rates in the fourth quarter at
0.41 per outlet per week (excluding investor deals) compared with
0.28 in Q4 2022. Our forward sales position is up 2% on the prior
year at GBP1,060m (2022: GBP1,040m), of which GBP499m relates to
private forward sales, up 4% (2022: GBP478m).
Land and planning
Land spend for the year was c.GBP430m (2022: GBP664m) of which
c.GBP260m was the settlement of land creditors (2022: GBP207m). Our
owned and under control land holdings stood at c.82,200 plots at 31
December 2023 (2022: 87,190 plots) and the embedded margin of the
land portfolio remains industry-leading.
As a result of our proactive approach to planning, we made good
progress in 2023 with detailed planning achieved on c.11,000 plots
in the year. This, combined with new land brought into our
pipeline, will underpin our target of opening a gross 30 outlets
for the spring selling season supporting our ambition to grow
outlets back to pre-covid levels over the medium-term.
WIP and cash
We ended the year with a strong and well capitalised balance
sheet with c.GBP420m of cash and c.GBP380m of land creditors. We
also start 2024 with a healthy level of work in progress with
c.4,100 equivalent units built. Disciplined management of both cash
and costs remains a key focus for the Group .
Outlook
We enter 2024 with private forward sales ahead of last year
driven by the year-on-year improvement in Q4 sales rates. Private
sales in the forward order book have increased by c.11% with a c.4%
increase in value to GBP499m. The private average selling price in
the forward order book is c.GBP266,100 predominantly reflecting the
mix effect of sites and homes sold, along with some targeted
investor sales. We anticipate market conditions will remain highly
uncertain during 2024, particularly for first-time buyers and with
an election likely this year. However, mortgage rates are beginning
to ease, and the response to our recent Boxing Day campaign has
been positive, generating a substantial number of leads for our
sales teams. Encouragingly, build costs continue to moderate which
will benefit completions in 2024.
The longer-term demand outlook for new homes remains favourable
. As a five-star builder, with private average selling prices below
the market average(1) , high quality land holdings, and a robust
balance sheet, Persimmon is well-positioned for sustainable growth
when conditions improve.
Persimmon will host a conference call with analysts at 08.30am
today.
A ll participants must pre-register to join this conference
using the Participant Registration link. Once registered, an email
will be sent with important details for this conference, as well as
a unique Registrant ID.
Participant registration page:
https://register.vevent.com/register/BI1cfa6ccbd82f4f38a6b0f4a7f1ff5d35
For further information please contact:
Vicky Prior, Group IR Director Olivia Peters
Anthony Vigor, Group Director of Policy Teneo
and External Affairs
Persimmon Plc persimmon@teneo.com
+44 (0) 1904 642 199 +44 (0) 7902 771
008
(1) Based on the Group's private average selling price of
c.GBP285,770 for the year to 31 December 2023 compared with the
national average selling price for new built homes sourced from the
UK House Price Index, as calculated by the Office for National
Statistics from data provided by HM Land Registry.
Appendices:
1. 2023 quarterly Q1 Q2 HY Q3 Q4 FY
performance
----------------------------- ------ ------ ------ ------ ------ ------
Completions 1,136 3,113 4,249 1,439 4,234 9,922
Net private sales
rate 0.62 0.58 0.59 0.48 0.69 0.58
FTB % (private completions) 38% 33% 34% 32% 26% 31%
Average sales outlets 266 268 267 271 257 266
2. Completions (homes) 2023 2022 Variance
------------------------ ------------- ----------- ---------
Private 7,681 12,174 -37%
Housing Association 2,241 2,694 -17%
------------------------ ------------- ----------- ---------
Total 9,922 14,868 -33%
------------------------ ------------- ----------- ---------
3. ASP 2023 2022 Variance
------------------------ ------------- ----------- ---------
Private c.GBP285,770 GBP272,206 5%
Housing Association c.GBP152,850 GBP142,017 8%
------------------------ ------------- ----------- ---------
Total c.GBP255,750 GBP248,616 3%
------------------------ ------------- ----------- ---------
31 December 2023 31 December 2022 Variance
4. Forward Value Homes Value Homes Value Homes
sales
--------------------- ------------ ------ ----------- ------ ------ ------
Private GBP499m 1,877 GBP478m 1,696 4% 11%
Housing Association GBP561m 3,530 GBP562m 3,966 - -11%
--------------------- ------------ ------ ----------- ------ ------ ------
Total GBP1,060m 5,407 GBP1,040m 5,662 2% -5%
--------------------- ------------ ------ ----------- ------ ------ ------
Cautionary statements
Some of the information in this document may contain projections
or other forward-looking statements regarding future events or the
future financial performance of Persimmon Plc and its subsidiaries
(the Group). You can identify forward-looking statements by the
terms such as "expect", "believe", "anticipate", "estimate",
"intend", "will", "could", "may" or "might", the negative of such
terms or similar expressions. Persimmon Plc (the Company) wishes to
caution you that these statements are only predictions and that
actual events or results may differ materially and as such undue
reliance should not be placed on these statements. The Company does
not intend to update these statements to reflect events and
circumstances occurring after the date hereof or to reflect the
occurrence of unanticipated events. Many factors could cause the
actual results to differ materially from those contained in
projections or forward-looking statements of the Group, including
among others, general economic conditions, the competitive
environment as well as many other risks specifically related to the
Group and its operations. Past performance of the Group cannot be
relied on as a guide to future performance.
Please see the most recent Annual Report and Accounts of
Persimmon plc and other disclosures through the Regulatory News
Service ("RNS") for further details of risks, uncertainties and
other factors relevant to the business and its securities .
The information in this trading statement is unaudited.
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END
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