Number of homes built last year down a third but firm finished 400 homes more than it predicted
Persimmon’s home completions dropped 33% last year but were higher than the housebuilder had previously forecast just two months ago.
Last November, the business said it expected to build around 9,500 homes in 2023, which would have been 36% down on the 14,868 built in the previous year.
But in a trading update published this morning, Persimmon revealed it had in fact built 9,922 homes after a better-than-expected fourth quarter performance.
The group also saw its private average selling price rise by around 5% to around £286,000 – up from £272,000. The average selling price at its partnerships business rose 8% to £153,000.
It said its full-year operating margins were expected to be in line with the 14% delivered in the first half of the year.
“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,” it added.
The firm’s forward sales position was up 2% on the prior year at £1.06bn, of which £499m relates to private forward sales, up 4%.
Dean Finch, group chief executive, said the business had “performed well in challenging market conditions” and had “successfully balanced our need to control costs, whilst investing in the business to position it for sustainable growth when conditions improve”.
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Andy Murphy, director of financials and industrials at investment relations firm Edison Group said the trading statement “showcase[s] the company’s resilience amidst the challenging market conditions for UK housebuilders”, but said “rising mortgage rates, lower buyer demand and inflated costs of raw materials” had impacted completion rates.
In a note, broker Investec added: “Understandably, management are not providing any guidance for 2024, but expect market conditions to remain highly uncertain. Mortgage rates have eased. Clearly the upcoming spring selling season is the next key catalyst for the sector and key is how quickly Persimmon can build its site numbers back and at what margins.”
The firm will release its 2023 results on 12 March.