- Fourth quarter completion top forecasts
- Shares up 12% over the last 12 months
- Firm still cautious on 2024 outlook
Shares in Persimmon (PSN) were up over 3% in morning trading to £14.40 after the York-headquartered housebuilder saw a strong recovery in sales in the final quarter of 2023 in what is traditionally a slow period for the industry.
The FTSE 100 company said it completed the sale of 9,922 new homes, ahead of previous guidance, and maintained its 5-star Home Builders Federation (HBF) rating.
Russ Mould, investment director at AJ Bell, said: ‘A decent end to the year has breathed some life into Persimmon after a patchy start to 2023 which saw a profit warning and a dividend cut last March. While it saw a sharp decline in new home completions, the number achieved was better than expected. Average selling prices were also resilient.’
‘The housebuilding sector has been shaken over the past two years thanks to inflationary pressures on costs and higher interest rates putting the dream of home ownership out of reach for many people.’
The group's average selling price increased by circa 5% to £285,770, ‘which largely reflects the mix of developments and house types sold’ the company said.
MIXED OUTLOOK
The only ‘fly in the ointment’ is the housebuilder’s outlook, which is mixed. Although the company ended the year with a well-capitalised balance sheet with circa £420 million of cash and £380 million of land creditors, it warned ‘market conditions will remain highly uncertain during 2024’.
Oli Creasey, property research analyst at Quilter Cheviot, said: ‘While a pickup in interest from buyers late in 2023 is likely to continue, Persimmon’s forward order book is largely unchanged versus 2022. Market conditions are expected to remain highly uncertain with an election looming, although easing mortgage rates and moderating build costs should prove beneficial.’
Persimmon releases its results for the year ending 31 December 2023 on 12 March.
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DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Sabuhi Gard) and the editor (Ian Conway) own shares in AJ Bell.
