TIDMPSN
RNS Number : 5547S
Persimmon PLC
07 November 2023
7 November 2023
Q3 Trading Statement
Trading in line with expectations; c. 9,500 completions expected
for the full year
Persimmon Plc is today providing an update on trading for the
period from 1 July 2023 to 6 November 2023 ('the period').
Dean Finch, Group Chief Executive, commented:
"Trading in the period was in line with expectations and pricing
was broadly stable. We are on track to deliver around 9,500 quality
new homes in 2023 with operating profit in line with expectations
and at an operating margin similar to the first half. While the
near term is likely to remain challenging and we remain disciplined
on costs, we continue to position the business for growth when the
market recovers, as demonstrated by our further progress on
planning in the period. The Group's national network of outlets
providing a high-quality product at a range of attractive prices is
a crucial strength in this market."
Q3 Highlights
Q3 2023 Q3 2022 % change
New home completions 1,439 2,270 -37%
Average open sales outlets 271 269 +1%
Net private sales per outlet(1) 0.48 0.63 -24%
Current forward sales position(2) GBP1.62bn GBP2.09bn -23%
Of which private forward sales(2) GBP0.93bn GBP1.42bn -35%
Land holdings (plots owned and c.84,300 c.91,300
under control)
(1) Net private sales per outlet of 0.46 excluding bulk sales
(Q3 2022: 0.61)
(2) Excluding completions year to date and as at 5 November for
2023 figure, as at 6 November for 2022 figure.
2023 Trading
The Group traded in line with expectations during the third
quarter, delivering a total of 1,439 homes (Q3 2022: 2,270 homes).
This included 1,234 private homes (Q3 2022: 1,894 homes) and 205
partnerships homes for our housing association partners (Q3 2022:
376 homes).
The Group's private selling price on completions was up 2% in
the quarter on the prior year at GBP 296,822. Our partnerships
average selling price increased 20% in the same period, reflecting
a higher weighting of completions to the South compared with the
prior year and the continued work of our dedicated Partnerships
team.
Average private sales per outlet per week were 0.48 in the
period (Q3 2022: 0.63). Trading in the period followed the normal
seasonal drop over the summer months and a pick-up from September
following the launch of our latest marketing campaign. Pricing was
broadly stable in the period despite continued affordability
constraints, particularly in the South of England where we have
seen an increase in the use of incentives. In the third quarter,
average incentives on private sales increased to c.3.6%.
Land, WIP and cash
Land spend in the third quarter was GBP78m (Q3 2022: GBP128m) of
which GBP34m related to the settlement of land creditors. Our owned
and under control land holdings stood at c. 84,300 plots on 30
September 2023 (30 June 2023: 84,751 plots) and the embedded margin
of the land portfolio remains industry-leading.
As a result of our proactive approach to planning, we achieved
planning on c.3,400 plots in the period across 19 sites, supporting
our outlet network. We have made good progress in converting our
priority list of owned land with outline planning permission,
having secured detailed or full consents on c.80% of these plots so
far this year.
We continue to operate from a lean fixed cost base and pursue a
highly disciplined approach to WIP management. As a consequence,
build rates in the third quarter were c.30% lower year-on-year
reflecting the slower sales environment. Disciplined management of
costs remains a key focus for the Group and in addition to careful
spend controls, the hiring freeze we have in place means that
headcount is likely to reduce by c.700 during 2023.
We continue to anticipate a cash balance of GBP300m-GBP500m at
the end of the current financial year.
Outlook
We are on track to deliver around 9,500 completions for 2023
with operating profit in line with expectations and at an operating
margin similar to the first half. On the whole pricing remains
broadly stable although we have seen a slight reduction in Group
private average selling price in the forward order book and an
increase in the use of incentives, particularly in the South where
affordability constraints are greater.
Over the past 5 weeks private sales rates have improved to 0.59
(2022: 0.45) showing a strong pick up since the start of October.
Of this 0.08 relates to investor sales, with a series of small
selective deals on targeted sites where appropriate. We anticipate
investor sales will represent c.5% of our full year delivery. We
are fully sold for 2023 and our current forward sales position has
increased to GBP 1.6 bn since the half year (30 June 2023:
GBP1.4bn). Of this GBP 0.9 bn relates to private forward sales (30
June 2023: GBP0.7bn) with a private average selling price of
c.GBP277,750 , (30 June 2023: GBP282,316 ).
We have taken a proactive approach with suppliers and
subcontractors to secure price reductions on both materials and
labour over the past few months. In line with prior commentary,
build cost inflation has been more stubborn than expected at the
start of the year and we anticipate the annualised impact of build
cost inflation through the P&L for 2023 will be c.8-9%.
However, build costs have moderated since the half year which will
benefit completions in 2024.
Into 2024, we anticipate market conditions will remain highly
uncertain, but we are well positioned with our focus on delivering
high quality sustainable homes for our customers at a price they
can afford with our Persimmon Homes average selling price c.25%
below the national average(1) . Our recent planning success means
we have a number of new sites progressing through the pipeline
which should support the opening of c.30 gross new selling outlets
during Spring 2024. The longer-term fundamentals for the market
remain positive. We have a proven track record of delivering strong
returns through the cycle and our good progress in improving our
key quality and service capabilities will allow us to respond
quickly when conditions improve.
Our next scheduled updates will be our 2023 Trading Update on 10
January 2024 followed by our 2023 Final Results on 12 March
2024.
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/BId7d2026b455543f9876ad81afa2dee84
For further information please contact:
Vicky Prior, Group IR Director Olivia Peters
Anthony Vigor, Group Director of Policy Teneo
and External Affairs
Persimmon Plc persimmon@teneo.com
01904 642 199 +44 (0) 7902 771 008
(1) National average selling price for new build homes sourced
from the UK House Price Index as calculated by the Office for
National Statistics from data provided by HM Land Registry.
Appendices:
1. 2023 quarterly performance Q1 Q2 HY Q3 YTD
------------------------------- ------ ------- ------- ------ -------
Completions 1,136 3,113 4,249 1,439 5,688
Private (homes) 902 2,379 3,281 1,234 4,515
Partnerships (homes) 234 734 968 205 1,173
Net private sales rate 0.62 0.58 0.59 0.48 0.56
FTB % (private completions) 38% 33% 34% 32% 34%
Average sales outlets 266 268 267 271 268
2. ASP Q3 2023 Q3 2022 Change
-------------- ------------ ------------ -------
Private GBP296,822 GBP291,259 +2%
Partnerships GBP155,844 GBP129,796 +20%
-------------- ------------ ------------ -------
Total GBP276,738 GBP264,515 +5%
-------------- ------------ ------------ -------
5 Nov 2023 6 Nov 2022 Change
3. Forward Value Homes Value Homes Value Homes
sales
-------------- ------------- ------ ------------ ------ ------ ------
Private GBP928.8m 3,344 GBP1,424.2m 4,993 -35% -33%
Partnerships GBP688.0m 4,414 GBP664.5m 4,662 +4% -5%
-------------- ------------- ------ ------------ ------ ------ ------
Total GBP1,616.8m 7,758 GBP2,088.7m 9,655 -23% -20%
-------------- ------------- ------ ------------ ------ ------ ------
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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