25 April 2024
If you are covering Persimmon’s Q1 trading statement, please see comment from Oli Creasey, property analyst at Quilter Cheviot:
“Much like Taylor Wimpey’s trading statement earlier this week, today’s announcement from Persimmon provides few surprises and few changes from 2023. Sales volumes are down slightly year-on-year (-10%), but more relevantly the number of sales per outlet is up (+6%), perhaps an early green shoot showing the beginning of a recovery in the housebuilding market.
“While the sales rate is moving in the right direction it is still around a third lower than the rates achieved in Q1 2022 when interest rates were significantly lower.
“The other green shoot visible is a 6% increase in the average sale price within the forward order book, which has increased significantly since the end of the year. This is an encouraging improvement, although it will be some time later this year when these sales are converted.
“Management has reiterated its guidance of around 10,000-10,500 completed homes this year, a marginal increase on 2023, but some way below 2022. Commentary suggests that volumes and sale prices are expected to accelerate in the second half of the year, again similar to the message from Taylor Wimpey’s executive team.
“Perhaps most interesting is the data not being provided. At Q1 last year, Persimmon reported a cash balance of £350m, while the equivalent figure has not been reported this morning. Management already noted in the 2023 full year announcement that the company was likely to use up cash reserves during 2024, although ending the year with a small positive cash balance, and we wonder if the cash reserves have already been exhausted and management would prefer not to draw attention to the fact.”
