Persimmon shares were down 2.3% to 2,129p in late morning trading on Wednesday, after the housing firm reported rising cost pressures and a lowered level of outlet completions in its Q1 2022 trading update.
The group confirmed that completions would fall short of 2021 levels, and that the timing of outlet openings would result in them being weighted in H2 2022.
However, the company mentioned that private sales reservation rates in the current period increased 2% on 2021 levels, as consumer demand for new build homes continued to outstrip supply and mortgage availability stayed high.
“Persimmon are the second housebuilder this week to point out demand for UK houses remains strong, following Taylor Wimpey’s positive outlook yesterday,” said Hargreaves Lansdown equity analyst Matt Britzman.
The group noted that it was on track to deliver full-year volume growth of 4-7% while maintaining margins, estimating that price growth would mitigate rising levels of building cost inflation.
“Persimmon continues to perform well. We are currently trading in line with expectations, demand remains strong, our private average sales rates are 2% higher year on year and we have a robust forward order book of £2.8bn,” said Persimmon CEO Dean Finch.
“As expected, reflecting the profile of outlet openings, we anticipate that completions this year will be weighted towards the second half, with first half completions being lower than those delivered in the first half of 2021.”
“We continue to expect to deliver volume growth for the full year 2022 of around 4-7% of 2021 levels, with resilient industry-leading margins.”
Persimmon’s £2.8 billion order book represented a decline from its £3 billion result the previous year, along with a £75 million commitment set for the group’s initiative to strip its properties of flammable cladding more than three years after the Greenfell fire disaster.
“As is the case with most of the major housebuilders, the group’s signed the government’s fire safety pledge to fix cladding issues. For Persimmon, unlike many of its peers, the previously set aside £75m is expected to cover the full costs of remedial work so no extra costs are expected,” said Britzman.
Persimmon is set to pay out a dividend of 110p on 8 July 2022, following the firm’s 125p dividend distributed in April.
