Persimmon posts strong results

Persimmons announced “healthy” demand over the last quarter thanks to strong sales amid the stamp duty holiday.

Forward sales jumped from £0.95bn in 2019 to £1.15bn, whilst sales of private new homes were up by 16%.

Dean Finch, chief executive, commented on the results: “Persimmon continued to perform well through the period against a backdrop of healthy demand, with private sales reservation rates per site remaining well ahead of 2019, as sales followed a more normal seasonal pattern as expected when compared to 2020.”

“While the industry continues to face challenges in the UK planning system, we are successfully bringing new land into construction and growing our already strong UK wide outlet network.”

In a statement, the housebuilder said it had a positive outlook for the year ahead. It said: “As we approach the quieter trading weeks of December and the Christmas holiday period, we are looking forward to being able to take advantage of the traditionally strong spring selling season in the new year.”

“Goldilocks Territory”

Persimmon have seemingly shook off the negative impact of supply chain issues and now sit in a favourable position going into the end of 2021.

“This is a broadly reassuring statement, but it does not really move the dial one way or the other, compared to what investors were already expecting to hear from Persimmon,”said Steve Clayton, HL Select fund manager.

“The group are in Goldilocks territory, with enough stuff going in their direction, house prices in particular, to offset challenges like wage inflation and materials shortages, to leave Persimmon in a very comfortable financial position.”

“Consumers want to buy, and the group has a £1.15bn forward sales position, well ahead of the level a year ago. Historic quality issues look to be behind the group, which is now getting five star scores for customer satisfaction. Persimmon’s geographic balance, selling in the towns and the shires, but not inner London, has left it largely immune to the cladding issues currently dogging the industry.”

“Even with reduced levels of Government support for homebuyers, reservation rates are running 16% ahead, although this strong sales rate is obliging the group to up the level of land buying.”

“Overall, it’s a positive picture that Persimmon is painting. Cash generation should be strong in these market conditions, which bodes well for dividends.  Like all home builders, Persimmon will be hoping that whatever course of action the Bank of England takes with interest rates, it does nothing to knock the housing market off balance. But with no news of any significant changes in Persimmon’s own story, it’s unsurprising to see the stock edging a few pence lower in early trading”.