Housebuilder Persimmon will report earnings next Tuesday and is expected to confirm a sharp drop in sale rates during 2023.
This will not be ‘new news’ for investors expecting a soggy set of results from the housebuilder who has been dogged by higher mortgage rates.
“Persimmon’s already told investors that its full-year sales rates fell around 16% in 2023, as high interest rates and the removal of the Help-to-Buy scheme have weighed on affordability. As a result, total completions of new homes were reduced by around a third, to 9,922,” said Aarin Chiekrie, equity analyst, Hargreaves Lansdown.
“These lower volumes, coupled with build-cost inflation, mean operating profit margins are set to roughly halve, to around 14%, when Persimmon reports full-year numbers on Tuesday.
“There was a “strong improvement” in fourth-quarter sales rates and investors are keen to see if this uplift has carried over to the new year. Markets expect operating profits to grow at double-digit rates to around £398mn in 2024. And with early signs that challenges for buyers are easing, there will be a focus on where Persimmon lays the marker for its 2024 guidance.”
A poor 2023 is already factored into the Persimmon share price and investors will pour over the release for any signs of improvements in the early months of 2024.
Guidance for 2024 will likely be the most important element of Persimmon’s upcoming full-year results. Any upside revisions to completion expectations will be very well received.