Persimmon’s full year results cast a shadow over their performance in the coming year despite an increased number of completions and higher average sales prices in 2022.
Persimmon shares were down over 8% following an update punctuated with warnings over the outlook for 2023 as the housebuilder battles higher mortgage rates and the cost of living crisis.
Commenting on the outlook for 2023, Persimmon CEO Dean Finch said “the sales rates seen over the last five months mean completions will be down markedly this year and as a consequence, so will margin and profits.”
The company said their forward sales rates fell to 0.3 in the fourth quarter of 2022 but had rebounded to 0.52 in the first eigth weeks of 2023.
“Persimmon, like its peers, has seen a slight pickup in sales since the start of the year. But overall, the outlook for the year ahead remains downbeat,” said Charlie Huggins, Head of Equities at Wealth Club.
“New home buyers are clearly exercising greater caution, and frankly who can blame them. Mortgage payments for first time buyers have significantly increased over the past year. When combined with the limited availability of high loan to value mortgages and the end of the Help to Buy scheme in England, it’s no surprise that the housing market has seen a marked slowdown.”
Persimmon 2022 results
Although the market rightly focused on the outlook for the year ahead, 2022 wasn’t a complete disaster for Persimmon.
New home completions rose to 14,868 from 14,551 and the average sales price rose to £248,616 from £237,078.
Operating profit for 2022 increased to £1,006.5m on an underlying new housing margin gross margin of 30.9%.