Persimmon’s Share Price Fell 4.13% Despite Full-Year 2023 Results

The Persimmon plc (LON: PSN) share price fell 4.13% after releasing its fiscal results for the year ended 31 December 2023. In the face of a tough market, the company reported significant strides in enhancing the quality of its operations. For the fiscal year 2023, it surpassed its initial projections by completing 9,922 new homes amid a robust output in the final quarter. 

The net rate of private home sales reached 0.58 per outlet weekly in 2023. Challenges such as reduced volumes, increased construction costs, and product mix influenced the underlying operating profit and margin as anticipated.

A noteworthy 43% reduction in NHBC reportable issues marks the delivery of the highest quality homes in the company's history. The NHBC customer satisfaction rate also climbed to 92.9%, maintaining a five-star HBF rating. Despite a slight decline in the latter half of the year, the average selling price (ASP) for private homes remained stable, as evidenced in the forward order book pricing.

The company adeptly managed its work-in-progress (WIP) investment to align with demand, ensuring no compromise on investments aimed at future expansion. An improved planning strategy led to approximately 11,000 plots receiving detailed consent, resulting in a 7% increase in ‘owned plots with detailed planning.' 

Net land expenditures totalled £398 million, which included £253 million for settling land creditors. The company's environmental efforts were recognised with a CDP climate survey score improvement to A- from the previous year's B.

The year has begun as anticipated, with a recent marketing initiative generating substantial leads. Despite facing continued affordability challenges, particularly for first-time buyers, and varied demand across regions, the company notes an improved net private sales rate per outlet per week early into 2024. 

Interest rates are expected to stay steady, and a general election is anticipated to keep market conditions muted throughout the year. Nonetheless, the company is positioned to navigate these challenges and aims for sustainable growth, planning to open 30 new outlets for the spring selling season.

The forward sales portfolio stands at £1.55 billion, with £946 million in private forward sales at an approximate ASP of £280,000. The company targets between 10,000 and 10,500 completions for 2024, maintaining a housing operating margin consistent with 2023. Construction cost inflation is projected at 3-5% for the year.

With plans to expand the outlet base and invest in anticipation of a market upturn, a new £700 million Revolving Credit Facility will be utilised in 2024.

Persimmon share price. 

The Persimmon share price fell 4.13% to trade at 1315.3p from Monday’s closing price of 1372.0p.