- New home completions up 5%
- Interim dividend held at 20p
- Shares up 37% over past year
Shares in Persimmon (PSN) perked up nearly 3% to £15.86 in morning trading after the leading housebuilder guided to full year completions of 10,500, the top end of management’s prior guidance.
The FTSE 100 firm also said underlying operating profit and margin were in line with expectations for the six months ended 30 June.
Underlying operating profit of £152.3 million was a smidgeon ahead of last year’s £152.2 million haul, albeit impacted by embedded build cost inflation and the private sales mix in the forward order book at the start of the year.
Persimmon generated total revenue of £1.32 billion compared to £1.19 billion last year, with new housing revenue rising from £1.09 billion to £1.17 billion year-on-year.
NEW HOME COMPLETIONS UP
New home completions were up 5% in the half to 4,445, including a 14% increase in private completions to 3,742 homes.
Persimmon said it is on track for full year completions of circa 10,500 new homes, at the top end of previous guidance.
The Yorkshire-headquartered housebuilder’s current private forward sales position is £1.12 billion, 28% higher year-on-year compared to £880 million last year, leaving the company well positioned entering the second half of the year.
NEW LABOUR GOVERNMENT
Persimmon seemed mildly encouraged by the new Labour government, particularly around planning, and said it is starting to see consumer confidence improving, leading to a strong pick up in inquiries and visitors.
According to the latest UK house price data from Halifax on 7 August, UK house prices increased by 0.8% in July, following three relatively flat months. The annual growth rate increased by 2.3%, the highest since January 2024.
Persimmon is also hoping that the recent cut to the Bank of England base rate will continue to boost consumer confidence.
ANALYSTS’ VIEWS
Oli Creasey, property analyst at Quilter Cheviot said: ‘Persimmon’s results this morning are encouraging, particularly sales volumes, which were up 5% year-on-year and ahead of market expectations. Persimmon is now guiding to full year completions of 10,500, the top end of management’s prior guidance.
‘The overall sales rate (sales per outlet per week) of 0.71 times is also increased 5%. However, it does seem to be driven by increased bulk sales of over 500 units which is four times as many as the first half of 2023, while the private sales rate of 0.59 times is a little disappointing given Taylor Wimpey’s (TW.) equivalent figure last week was 0.69 times.
‘These results are encouraging, particularly growing volumes and revenues, but it is notable that it has not yet translated into increased profits. Operating margins are still well below long-term averages, even if there is a recovery in the second half as management expects, and it will be a long road back to the sort of margins experienced pre-2022.’
AJ Bell investment director Russ Mould said: ‘News leading housebuilder Persimmon delivered completions at the top end of its previous guidance will be music to the ears of a new Labour government which has prioritised increasing the supply of new homes.
‘But, while Persimmon did specifically reference recently loosened planning laws alongside its first half results, the big driver is ultimately signs of improved demand – with the Bank of England’s first-rate cut representing a significant moment.
‘The housebuilding sector is heavily reliant on the availability of affordable mortgages, and, from that point of view, the trajectory of borrowing rates is heading in the right direction.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Sabuhi Gard) and the editor (James Crux) own shares in AJ Bell.
