10 August 2023
If you are covering Persimmon’s half year results, please find a comment below from Oli Creasey, equity research analyst at Quilter Cheviot:
“Persimmon’s half year results were as expected. Volumes down -36% vs H1 2022, although sales prices have remained firm. Persimmon’s headline sales rate actually increased 4%, albeit the amount of incentives given back to buyers has now doubled to 3.2% of the total price, suggesting that actual prices paid are virtually flat.
“The order book (sales agreed but not completed) is steady at £1.6bn. However, six months ago private sales were a low proportion of this – less than a third, a figure which has recovered to be more than half today. It is encouraging to see that the company is now less reliant on bulk transactions to maintain volumes.
“The company guidance for volumes is encouraging. Despite only selling 4,249 houses in H1, the company has increased guidance for full year volumes to at least 9,000 suggesting volumes will be at least 105 higher in H2.
“Given the fall in volumes vs 2022, the company’s operating margin has been hit, almost halving to 14%. However, Persimmon is doing its best to control costs with cost inflation remaining around 5%, but is expected to moderate in H2. We also note that the company has halved the number of reportable items – issues found to be non-compliant with NHBC standards that need to be fixed prior to completion. Controlling this figure will help keep costs low, but also increase customer satisfaction, which remains high with Persimmon retaining its five-star customer rating in the period.”
