REG - Persimmon Plc - Trading Statement

PersimmonAnnouncement

10/01/2024 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240110:nRSJ1548Za&default-theme=true

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.£255,750   £248,616   +3%
 Average open sales outlets                     266          259        +3%
 Cash at 31 December                            £420m        £862m
 Current forward sales position                 £1,060m      £1,040m    +2%
 Of which private forward sales                 £499m        £478m      +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.£285,770 (2022: £272,206) 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.£152,850 (2022:
£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
£1,060m (2022: £1,040m), of which £499m relates to private forward sales,
up 4% (2022: £478m).

 

Land and planning

Land spend for the year was c.£430m (2022: £664m) of which c.£260m was the
settlement of land creditors (2022: £207m). 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.£420m of cash and c.£380m 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 £499m. The
private average selling price in the forward order book is c.£266,100
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.

 

All 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
(https://protect-eu.mimecast.com/s/4ZDfCVN2DhX5BYOtGqnTK?domain=register.vevent.com)

 

For further information please contact:

 Vicky Prior, Group IR Director                                Olivia Peters
 Anthony Vigor, Group Director of Policy and External Affairs  Teneo

 Persimmon Plc                                                 persimmon@teneo.com (mailto: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.£285,770 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 performance   Q1     Q2     HY     Q3     Q4     FY

 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.£285,770   £272,206   5%
 Housing Association       c.£152,850   £142,017   8%
 Total                     c.£255,750   £248,616   3%

 

 

                      31 December 2023      31 December 2022      Variance
 4.  Forward sales    Value      Homes      Value      Homes      Value  Homes
 Private              £499m      1,877      £478m      1,696      4%     11%
 Housing Association  £561m      3,530      £562m      3,966      -      -11%
 Total                £1,060m    5,407      £1,040m    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.

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  TSTBLMRTMTJMBTI