Persimmon has published an optimistic outlook for the new year in a recent trading update, following a challenging market in 2023.
New home completions (sales) fell 33 per cent from 14,868 in 2022 to 9,922 last year but saw a higher delivery in Q4.
Full year operating margins are expected to be 14 per cent, in line with the first half. The group was hit by build cost inflation, lower volume, some remediation costs, and exiting two developments.
High interest rates and the removal of Help-to-Buy also impacted demand, it said.
The group’s manufacturing facilities, Brickworks, Tileworks and Space4, aligned output and costs with lower completions.
Forward sales were up 2 per cent on 2022 to well above £1 billion, of which £499 million was in private sales (+4 per cent).
Land holdings for the group totalled 82,200 (FY2022: 87,190) and land spend was £430 million (FY2022: £664 million), of which £260 million was due to creditors (FY2022: £207 million).
Persimmon’s cash position at 31 December 2023 was £420 million, compared to £862 million in the prior period.
Full results for the group for the year ended 31 December 2023 will be released 12 March.
Dean Finch, group chief executive, said: “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.”
Outlook
Adding: “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. Encouragingly, build costs continue to moderate which will benefit completions in 2024. The longer-term demand outlook for new homes remains favourable.”
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