Persimmon Homes: Share price lifts on recent uptick despite 42 per cent knock in home sales
Persimmon Homes share price lifted nearly four per cent this morning, after the group reporting a 42 per cent knock in the number of homes completed in the first leg of the year.
The house building group reported strong traffic to its website and improvement in sales reassured investor confidence.
The house building group, which is one of the largest across the UK, said that sales secured on homes was down to 1,136 at the start of this year compared to 1,950 homes in the first quarter of last year.
As the housing market was rattled by rapidly increasing inflation, the London-listed company also revealed that its cash position at the end of March fell by 18 per cent to £353m down from £433m in Q1 2022.
Despite this, Persimmon said that its pricing remained “firm” in the first quarter as the selling price on private homes grew 10 per cent on the same period last year and four per cent on the end of 2022.
“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,” Dean Finch, group chief executive at Persimmon said.
He continued: “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.”
Last year, Persimmon’s revenues increased by £.3.8bn, from £3.6bn the previous year, however the group has long warned the market that the current housing climate remains “uncertain.”
Why are investors buoyed?
Commenting on Persimmon Homes soaring share price, Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown,told City A.M: “It’s largely due to the outlook and also the uptick in sales in recent weeks.
“Investors have been cheered by signs trading over recent weeks has offered signs of encouragement with cancellation rates heading back towards normal levels and an improvement on sales since the start of the year.”
“Because the housebuilder expects build rates to be at the top end of its annual guidance range, investors worries that the slowdown will continue into 2024 have been allayed.
“So they are looking past the current fall in revenue to in the prospects further ahead on the horizon, with the company stressing that longer term demand for new homes remains robust.”