07 November 2023
If you are covering Persimmon’s latest results, please see the following comment from Oli Creasey, property analyst at Quilter Cheviot:
"The highlight of today’s trading statement from Persimmon is improved guidance for full year volumes, with the company now expecting 9,500 deliveries in 2023, compared to “at least 9,000” guided to over the summer. That’s good news for investors, as the declining volumes compared to prior years have been the main source of declining profits across the housebuilding industry. That said, the sales rates still look depressed compared to history – 0.48 homes sold per week per outlet in Q3 2023 is low when compared to the 0.91x achieved in H1’22 (ie: pre-interest rate rises). There has been some improvement in this rate since the end of Q3 – the figure for November was 0.59x, although most of the uptick relates to investor sales.
"With the company now fully sold for 2023, the volume guidance is locked in, short of a surprising number of last minute cancellations. However, the market conditions for 2024 remain highly uncertain, and PSN have not provided any guidance for next year at this point.
"Interestingly, prices are holding firm: +2% year-on-year, and although higher incentives of +3% cancel this out, it is still a resilient price environment. Build cost inflation continues to be an issue, but moderated in H2, and is likely to have less of a margin impact in 2024."
