TIDMPSN
RNS Number : 4496X
Persimmon PLC
26 April 2023
26 April 2023
Q1 Trading Statement
Persimmon Plc is today providing an update on trading for the
period from 1 January 2023 to 31 March 2023, ahead of its Annual
General Meeting ("AGM") which is being held at 12.00 noon today in
York.
Dean Finch, Group Chief Executive, commented:
" Our performance in the first quarter was as we expected and
reflects the challenging trading conditions in Q4 2022 and
consequent lower forward order book as we entered the year. Trading
over recent weeks has offered some signs of encouragement with
visitor numbers up, cancellation levels normalising and sales rates
continuing the steady improvement evident since the start of the
year. If sales rates continue at the levels seen year to date, we
would expect full year 2023 volumes to be toward the top end of the
previously indicated range of 8,000 to 9,000 completions. Sales
prices remained firm in the period as customers recognised the
quality, improved value and energy efficiency of our homes, with a
good response to our marketing campaigns driving strong customer
interest.
"We are delighted to have been awarded five star status for
customer satisfaction by the Home Builders Federation for a second
year running, reflecting the hard work that has gone into putting
our customers right at the heart of our business.
" Looking beyond 2023, Persimmon has a strong platform from
which to grow outlets and volumes as the market recovers. We have
an excellent pipeline of new land opportunities to support growth
in 2024, subject to planning, and we are encouraged by the early
signs of improved customer confidence. The longer-term demand
fundamentals for new homes remain robust and Persimmon has made
significant progress over the past two years in building a
stronger, more sustainable business for the future."
Q1 Highlights
Q1 2023 Q1 2022 % change
New home completions 1,136 1,950 -42%
Average open sales outlets 266 245 +9%
Cash at 31 March GBP353m GBP433m -18%
Net private sales per outlet(1) 0.62 0.98 -37%
Current forward sales position(2) GBP1.7bn GBP2.4bn -30%
Of which private forward sales(2) GBP1.0bn GBP1.8bn -47%
Land holdings (plots owned and
under control) c.86,400 c.92,100 -6%
(1) Net private sales per outlet of 0.58 excluding bulk sales
(Q1 2022: 0.98)
(2) Excluding completions year to date and as at 26 April 2023
for 2023 figure, as at 27 April 2022 for 2022 figure.
Trading
The Group traded in line with expectations during the first
quarter. As previously announced, the forward sales position at 1
January 2023 was GBP1.0bn, down 36% year-on-year as the challenging
trading environment in the second half of 2022 resulted in lower
sales rates and elevated cancellation rates, particularly in Q4.
This reduced forward sales position led to a 42% reduction in Group
completions in the first quarter to 1,136 homes (Q1 2022: 1,950
homes). This included 902 private homes (Q1 2022: 1,631 homes) and
234 homes for our housing association partners (Q1 2022: 319
homes).
Since the start of the financial year, we have seen a steady
improvement in sales rates, achieving net private sales per outlet
of 0.62 in the first quarter, compared with 0.30 in Q4 2022 and
0.98 in Q1 2022. Customer interest remains good, with our marketing
campaigns continuing to generate healthy traffic to site and
online. Sales rates and cancellation rates have been stable over
the past few weeks although it is too early to tell whether they
will follow normal seasonal patterns during the remainder of the
year.
Overall pricing remained firm in the first quarter, with the
Group's private average selling price on completions up 10% on Q1
2022 and up 4% on Q4 2022. Incentives on new home reservations
continue to run at around 3% on average, with good interest
generated by our part exchange and 10 months mortgage free
campaigns. Overall, build cost inflation continues to track at
around 8-9%, with limited signs of easing in the short-term.
We responded quickly to the deterioration in market conditions
in the second half of 2022, by controlling our costs and managing
our build programmes to conserve cash. Build rates in the first
quarter were 30% lower year-on-year at 176 equivalent units per
week (Q1 2022: 252 equivalent units per week).
As a result of the improved sales rates in the first quarter,
our forward sales position has increased to GBP1.7bn since the
start of the year (31 December 2022: GBP1.0bn), of which GBP1.0bn
relates to private forward sales (31 December 2022: GBP0.5bn) with
a private average selling price of c.GBP276,200, (31 December 2022:
c.GBP282,100).
Our vertical integration, through our Space4 timber frame
facility, and our Brickworks and Tileworks manufacturing
facilities, remains a key part of our strategy and a differentiator
for the Group. In April, we committed to invest GBP25m into TopHat,
an innovative modular home manufacturer. This investment provides
Persimmon with guaranteed access to TopHat's highly
energy-efficient volumetric modular units as well as an innovative
brick façade to use with our Space4 timber frame products. The new
partnership will provide further build efficiencies, help manage
the growing challenge of labour shortages in key trades and expand
our product range for customers.
Customer satisfaction
We are delighted to have been awarded five-star homebuilder
status by the Home Builders Federation for the second year running,
reflecting the hard work that has gone into putting customers right
at the heart of our business as we deliver high quality homes to
them at a price they can afford.
Legacy building safety
During the first quarter, we signed both the UK Government's
Self Remediation Contract (in England) and also the Welsh
Government's Developers' Pact, which turn the respective Building
Safety Pledges into binding commitments. The industry is discussing
with the Scottish Government the terms of a Scottish Safer
Buildings Accord. While these discussions are on-going, we remain
committed to completing any necessary works on buildings we
developed. Work to remediate the buildings for which Persimmon is
responsible, is proceeding to schedule.
Land, WIP and cash
Land spend in the first quarter was GBP173m (Q1 2022: GBP278m)
of which GBP131m was the settlement of land creditors. Our owned
and under control land holdings stood at c.86,400 plots at 31 March
2023 (31 March 2022: c.92,100 plots) and the embedded margin of the
land portfolio remains industry-leading. We have a strong platform
to prepare for a new growth phase when market conditions permit.
Although 2023 will be a difficult year, Persimmon has the
opportunity to expand our outlet network at the right time through
disciplined and targeted investment. We remain focused on
progressing these opportunities through the planning system and
converting them into active sites.
The Group acted quickly to enhance its already strong investment
discipline and working capital cost controls towards the end of
2022, to protect our cash position and provide the flexibility to
pursue new growth opportunities in the longer-term. We ended the
first quarter with cash of GBP353m (31 March 2022: GBP433m) and we
will continue to pursue a highly disciplined approach to WIP
management, and cost control with the Group operating from an
already lean fixed cost base.
Outlook
While the outlook remains uncertain, we are encouraged by the
level of visitors to our sites and the normalisation of
cancellation rates, which resulted in a steady improvement in sales
rates across the period which has continued in early April. These
early signs of increasing customer confidence are particularly
evident in demand for our three, four and five bed homes. While
interest remains good for all our homes, sales to first time buyers
remain more challenging, reflecting stretched affordability and
reduced mortgage availability at higher loan-to values,
particularly in regions with higher house prices.
We anticipate average open sales outlets will remain broadly
flat during 2023 at 250-260 outlets. If sales rates continue around
the level seen year to date, we would expect full year 2023 volumes
to be toward the top end of the previously indicated range of 8,000
to 9,000 completions. With sales rates being atypical over the
recent months, it remains unclear how trading will develop for the
remainder of 2023. As outlined at our 2022 full year results, lower
completions and build cost inflation outstripping the more modest
increase in ASP are, as expected, having a significant impact on
the Group's profit margins this year.
Longer-term, we see excellent opportunities for the business and
we have a good pipeline of new sites expected to come through for
2024 to generate growth in our outlet position, subject to
planning. With this growth in outlets, and signs that the
improvement in consumer confidence is being sustained, we
anticipate a return to volume growth and expansion of margins in
2024.
The Group entered this period of uncertainty with a strong
balance sheet, including a robust cash position and
industry-leading embedded margins in our land holdings. The
longer-term demand outlook for new homes remains favourable and we
will continue to position the business for success in the future,
maintaining our focus on quality and customer service and
converting our land holdings into active developments as we look to
grow our outlet position over the medium-term.
On 28 February 2023, the Competition and Markets Authority (CMA)
launched a market study into housebuilding in England, Scotland and
Wales. We have been responding constructively in these early stages
of the study.
Persimmon will host a conference call with analysts at 08.30am
today.
All participants must pre-register to join this conference using
the Participant Registration link. Once registered, an email will
be sent with important details for this conference, as well as a
unique Registrant ID.
Participant registration page:
https://register.vevent.com/register/BI903699b16eba49bbacea663e8eb74c33
For further information please contact:
Vicky Prior, Group IR Director Kevin Smith
Anthony Vigor, Group Director of Policy and Holly Gillis
External Affairs Ellen Wilton
Persimmon Plc Citigate Dewe Rogerson
01904 642 199 020 7638 9571
Appendices:
1.Quarterly performance Q1 2023 Q1 2022 Variance
----------------------------- -------- -------- ---------
Completions (homes) 1,136 1,950 -42%
Private (homes) 902 1,631 -45%
Housing Association
(homes) 234 319 -27%
Net private sales
rate(1) 0.62 0.98 -37%
FTB % (private completions) 38% 33% +500bps
Average sales outlets 266 245 +9%
(1) Net private sales per outlet of 0.58 excluding bulk sales
(Q1 2022: 0.98)
26 April 2023 27 April 2022 Variance
2.Forward Value Homes Value Homes Value Homes
sales
--------------------- ---------- ------ --------- ------- ------ ------
Private GBP1.0bn 3,496 GBP1.8bn 6,738 -47% -48%
Housing Association GBP0.7bn 4,715 GBP0.6bn 4,369 +29% +8%
--------------------- ---------- ------ --------- ------- ------ ------
Total GBP1.7bn 8,211 GBP2.4bn 11,107 -30% -26%
--------------------- ---------- ------ --------- ------- ------ ------
Cautionary statements
Some of the information in this document may contain projections
or other forward-looking statements regarding future events or the
future financial performance of Persimmon Plc and its subsidiaries
(the Group). You can identify forward-looking statements by the
terms such as "expect", "believe", "anticipate", "estimate",
"intend", "will", "could", "may" or "might", the negative of such
terms or similar expressions. Persimmon Plc (the Company) wishes to
caution you that these statements are only predictions and that
actual events or results may differ materially and as such undue
reliance should not be placed on these statements. The Company does
not intend to update these statements to reflect events and
circumstances occurring after the date hereof or to reflect the
occurrence of unanticipated events. Many factors could cause the
actual results to differ materially from those contained in
projections or forward-looking statements of the Group, including
among others, general economic conditions, the competitive
environment as well as many other risks specifically related to the
Group and its operations. Past performance of the Group cannot be
relied on as a guide to future performance.
Please see the most recent Annual Report and Accounts of
Persimmon plc and other disclosures through the Regulatory News
Service ("RNS") for further details of risks, uncertainties and
other factors relevant to the business and its securities.
The information in this trading statement is unaudited.
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END
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