Persimmon: Housebuilder posts uptick in profit amid housing market recovery
Housebuilder Persimmon has reported an uptick in house completions and profit after two years of steep declines.
The York-based company completed 10,664 homes in the year ended December 31, up seven per cent year on year.
This was at the higher end of its £349m-to-£390m forecast, marking a slight improvement from last year.
In 2023, profits nearly halved to £352m after soaring inflation and high interest rates hobbled the UK’s housing market.
Persimmon reported a profit margin of 14.1 per cent, up from 14 per cent last year, which it attributed to operational efficiencies helping it to offset build cost inflation early in the year.
The company maintained its dividend per share at 60p for the year.
Chief executive Dean Finch said: “Persimmon’s disciplined investment and significant operational improvements in recent years has created a stronger business.
“With our strong platform in place, we are targeting further growth this year and are confident the business will grow margins, returns and shareholder value over the medium term.”
The housebuilder added that customer enquiries and sales rates have been “consistently ahead of the prior year” since last spring and that private average selling prices increased as the year progressed.
Demand for housing has improved as affordability constraints have lifted, particularly for mortgages. This has been helped by inflation falling from its 2023 highs and several interest rate cuts by the Bank of England.
“The underlying market fundamentals remain strong and we are encouraged by the further improvement in our sales rates in the early weeks of this year,” Finch added.
Persimmon will target 11,000-11,500 completions this year, as well as an improved underlying operating margin to between 14.2 per cent and 14.5 per cent.
Analysts positive on Persimmon
Shares in Persimmon rose nearly five per cent in early trades.
Peel Hunt analysts said: “Persimmon is delivering well in a market that, while improving, is challenging, and is well placed, in our view, to continue delivering outlet and volume growth.”
Similarly, AJ Bell investment director Russ Mould said the housebuilding sector has been “given a major boost after Persimmon’s 2024 numbers came in ahead of expectations”.
“While the scale of the beat was modest, it comes after a difficult period for the sector and therefore the market is eager to seize on even the smallest morsels of good news. Add in a robust outlook for 2025, backed by a strong order book, and all the foundations were in place for a relief rally.
“While there are pockets of build cost inflation, Persimmon seems to be managing them for now. The housebuilders may not get back to the golden period when they benefited from cheap mortgages, rising house prices, stable costs and the Help to Buy scheme stoking demand any time soon, but it does look like the background is stabilising,” Mould added