Persimmon Shares Rose 4.0% Despite Fewer Completions in 2023

The Persimmon plc (LON: PSN) share price rose 3.97% after releasing a trading update for the year ended 31 December 2023 ahead of its full-year results scheduled for 12 March 2024. The Group successfully navigated challenging market conditions, exceeding its sales targets by completing 9,922 new homes, especially with a strong performance in Q4. 

Still, the house completions were down 33% compared to 2022’s 14,868 homes. This achievement was accompanied by maintaining a 5-star HBF rating and achieving a 43% improvement in reportable items per home, as measured by the NHBC.

The Group's private average selling price saw an approximate 5% increase to around £285,770, primarily reflecting the mix of developments and house types sold. The first half of the year saw firm pricing, while the second half experienced some softness with increased incentives, amounting to about 4% for the year.

The partnerships’ average selling price increased 8% to approximately £152,850. Full-year operating margins are expected to be around 14%, consistent with first-half results. This reflects the impact of build cost inflation, lower volume, one-off costs for site remediation, accelerated site exits, and further business investments.

The Group's vertically integrated manufacturing facilities, including Brickworks, Tileworks, and Space4, aligned output with the year's lower completions, operating with low fixed costs. Work in progress was closely controlled, with overall build rates tracking about 28% lower than the previous year.

Despite high interest rates and the end of Help-to-Buy, there was a sustained interest in homes, with an average private net sale of 0.58 per outlet per week for the year. The forward sales position is up 2% on the prior year at £1,060m.

The Group concluded the year with a strong balance sheet, around £420m in cash and about £380m in land creditors. 

Dean Finch, Persimmon’s Group CEO, commented: “Persimmon performed well in challenging market conditions, delivering completions ahead of expectations in 2023 alongside enhanced quality metrics of our already five-star homes. Persimmon's offering is resonating well with customers with sales rates relatively robust throughout the year. We have successfully balanced our need to control costs whilst investing in the business to position it for sustainable growth when conditions improve. I would like to thank our colleagues, sub-contractors and suppliers for their commitment and support.”

Persimmon share price. 

The Persimmon share price rose 3.97% to trade at 1453.8p from Tuesday’s closing price of 1398.3p.