Persimmon has announced a very positive set of half-year results for 2024, which may prove to be a major turning point for the housebuilder in the face of challenging market conditions.

Investors will be delighted to learn that the housebuilder is set to deliver completions at the top end of its guidance for the year as the backdrop shows early signs of improvement.

However, the strength of today’s results can not be attributed solely to the macro environment. Persimmon’s numbers have a distinct tone of positivity to them that makes the builder stand out from its peers, who are still reporting falling completions in the same market.

The company reported a significant 5% increase in new home completions, reaching 4,445 in the first half of 2024. This uptick was primarily driven by an impressive 14% surge in private completions, totalling 3,742 homes. Persimmon now confidently projects full-year completions to hit approximately 10,500 units, placing them at the upper limit of their previous guidance.

Total Group revenue climbed to £1.32 billion, marking a substantial improvement from the £1.19 billion recorded in the same period last year. This growth can be attributed to both increased completions and a rise in the average selling price, which now stands at £263,288.

Since 1 July, the company’s net private sales rate has soared by 68% compared to last year, reaching 0.69 per outlet per week.

“These are solid first half results from Persimmon with improved sales and robust average sales rates. As a result, the group now expects 10,500 home completions for the year, at the top end of its previous guidance range,” said Wealth Club’s Charlie Huggins.

“There are signs that confidence is returning to the housing market. 

“Interest rates have finally started to be cut, mortgage rates are coming down and a landslide labour victory provides further fuel for optimism, particularly given their pro-housing agenda.”

The recent changes in the UK government and Labour’s new homebuilding agenda promisse to provide support for Persimmon when it truly kicks in.

The company has invested £195 million in land during the first half of 2024 and has secured detailed planning on approximately 6,000 plots year-to-date. This strategic move has strengthened their land bank, which now stands a 81,545 plots owned and under control.

The FTSE 100 rallied again on Wednesday as Monday’s selloff increasingly looked like a flash in the pan. Global equities have stabilised, and bargain hunters are snapping up beaten-down shares.

Traders would have been watching the Japanese Nikkei overnight for clues of global investor sentiment after a 12% drop on Monday and a subsequent 10% rally on Tuesday. The index gained 1.2% overnight, providing a semblance of calm as the European session got underway, helping the FTSE 100 rally 0.7% in early trade on Wednesday.

“The FTSE 100 took succour from a continued recovery in Asian and US stocks overnight to trade appreciably higher on Wednesday morning,” said AJ Bell investment director Russ Mould.

“Although with warnings that the unwinding of carry trades – seeing people borrow at low cost in one currency to achieve higher returns from investments in another – are still to fully play out, there remains an air of tension around financial markets.

“Helping to provide at least a measure of calm was the Bank of Japan. Deputy governor Shinichi Uchida signalled there was no plan to increase interest rates further ‘for the time being’ after the yen surged on the second Japanese rate hike in 17 years last week.”

Housebuilders were on the front foot on Wednesday after Halifax data showed average UK house prices picked up in July after a soft June. Persimmon rose 2%, Taylor Wimpey gained 1.6%, and Barratt Developments perked up 1.8% on the news that UK house prices rose 0.8% in July.

“After a bit of a washout for the property market earlier this summer, the sun finally came out in July. This could be a sign of things to come, because the interest rate cut this month could help warm buyers up for a hotter autumn,” said Sarah Coles, head of personal finance, Hargreaves Lansdown.

“July’s price growth came alongside a slight easing in mortgage rates, as the market priced in an August rate cut. The cut came on cue, and is likely to mean modest price growth through the rest of 2024. However, it’s not going to be a patch on the boom of recent years.”

The FTSE 100’s rally was broad, with all but 11 shares in positive territory at the time of writing.

Glencore was 2% higher after announcing it would stick with its coal business after floating the idea of disposing of it earlier this year. Lower coal prices were instrumental in a sharp decline in the miner’s first-half EBITDA, although investors are clearly upbeat about the future outlook for the unit.

Falling revenue less pass-through costs sent WPP to the bottom of the leaderboard as the advertising giant fell 2%.

We highlighted Ibstock as a stock to buy before the election to capture the new Labour government’s housing policies, and Ibstock today said it expects a ‘more positive backdrop’ for the housing industry in its interim results, which helped shares higher in the immediate reaction.

After suggesting the stock when it was trading at 158p, it rallied to highs of 196p before falling back. This rally priced in enthusiasm around any boost in construction, and today’s results serve as a reminder of the more favourable conditions on the horizon as shares jumped over 6% to 183p.

Of course, the new Labour government has no impact on Ibstock’s first-half earnings, and the brickmaker has revealed a challenging start to 2024 as the well-documented constraints on new building activities persisted. In response, Ibstock is taking defensive measures, including cost-cutting schemes and the reduction of the dividend. 

The combination of positive cost-cutting actions and an improving macro outlook offset any concerns about a 20% drop in first-half revenues and a 60% slump in profit before tax on Wednesday.

“There’s no getting around it, brickmaker Ibstock’s had a tough first half as elevated mortgage rates continue to weigh on housing affordability, causing housebuilders to be conservative on new building projects,” said Aarin Chiekrie, equity analyst, Hargreaves Lansdown.

“Ultimately, that’s contributed to reduced demand for Ibstock’s products. While some leading indicators are beginning to improve, it’s very early days and their impact on the current financial year is likely to be limited, so Ibstock expects cash profits (EBITDA) in the second half to be in line with the prior year’s level of around £44mn.

“The new government’s emphasis on reforming the national planning framework and speeding up the delivery of new housing and infrastructure is a significant positive for the industry, likely increasing demand in the medium term.

“In the meantime, Ibstock needs to look after its balance sheet, and the dividend has been wound back to help preserve cash. Cost cuts are continuing at pace, bringing more than £20mn of savings in the first half. The group says these actions haven’t dented its ability to build back capacity as markets recover. But just how long it will be before that happens remains to be seen.”

Legal & General results were boring, but investors will appreciate that in the current climate.

The big attraction for investors is the Legal & General dividend. Although there was some disappointment at the outcome of a recent capital markets day when the company outlined tepid dividend increases in the coming years, the company yields in the region of 9%, and there’s nothing in today’s report to suggest that it is under threat.

L&G’s key profitability metrics showed marginal signs of improvement in the first half and were nothing to get excited about. Investors have had enough excitement for one week already, and the reassuring update sent shares 0.5% higher on Wednesday.

Core operating profit for the period rose to £849m from £844m in the same period last year. EPS rose to 10.58p from 10.52p. Boring yet reassuring.

“Legal & General has inched over the line of beating consensus by 1% in a very steady if not uneventful set of results,” said Adam Vettese, Market Analyst at eToro.

“They expect growth to continue in the mid-single digits, have increased their dividend and announced a £200m share buyback. Arguably this is exactly the kind of news investors want to hear after the week they have had given the recent global sell-off. 

 “A fall in AUM was offset by a huge uptake in individual annuities. These products pay a fixed income in retirement for life and have proved more attractive in this higher interest rate environment.  

“L&G also noted that macro conditions do represent a risk to their performance and are not immune from any volatility as some recession fears or at least fears of a ‘hard landing’ may have crept in over the last week. The firm’s construction arm has started to see the benefit of supply chain and inflation pressure easing, which should continue as the year goes on.”

The interim dividend increased 5%. Legal & General at these prices is one to tuck away and forget about. 

Glencore has reported a mixed bag of financial results for the first half of 2024 as the mining and metals giant grapples with market normalisation, commodity price fluctuations, and ongoing concerns about demand from China. It has also decided to retain its coal business, rolling back on plans to sell the unit.

Glencore’s Adjusted EBITDA plummeted by 33% to $6.3 billion, with the company’s coal operations accounting for a $2.7 billion reduction in earnings due to substantial falls in key thermal coal pricing benchmarks.

While net income attributable to equity holders before significant items stood at $1.5 billion, the company actually reported a net loss of $233 million after accounting for $1.7 billion in significant items, including around $1 billion in impairment charges.

The Marketing Adjusted EBIT, a key indicator of the company’s trading performance, fell by 16% to $1.5 billion. This decline was partially offset by a strong showing in the metals sector, highlighting the diverse nature of Glencore’s operations.

In a surprise move, Glencore’s board has decided to retain its coal and carbon steel materials business following extensive shareholder consultation. This decision aims to enhance the company’s cash-generating capacity and fund opportunities in transition metals.

“Critically, we have also clarified the immediate future of our coal and carbon steel materials business,” said Glencore’s Chief Executive Officer, Gary Nagle.

“Following completion of the acquisition of EVR in early July, we undertook an extensive consultation with shareholders and based on the outcome of that process and the Group’s own analysis, Glencore’s Board, considering both risk and opportunity scenarios, endorsed the retention, rather than demerger, of the coal and carbon steel materials business, as currently providing the optimal pathway for demonstrable and realisable value creation for Glencore shareholders.”