Persimmon publishes its half-year results for the six months ending 30 June 2022

Persimmon Plc has today (17 August 2022) announced its half-year results for the six-month period that ended 30 June 2022.

Headlines:

• Strong demand – average private sales rate for the period c.1% ahead year on year, with robust forward sales position and re-iterate guidance of 14,500 -15,000 legal completions this year;
• 6,652 new home completions (2021: 7,406) as Group rebuilds its outlet position;
• Robust financial performance delivering industry-leading margins and ROCE;
• Strong customer service, build quality and efficiency;
• On track to achieve c.10% increase in active outlets by the end of the current year with 60 outlets opened in the period;
• 8,829 plots brought into the business across 37 locations – a replacement rate of over 130%;
• Returned £750m to shareholders by July 2022.

Highlights:

Dean Finch, Group Chief Executive, said:

“Persimmon continues to perform well. We are making important progress in quality, service, land investment opportunities and efficiencies to build an even stronger business, while continuing to deliver the strong financial returns that Persimmon is renowned for.

“Demand for our attractively priced, high quality homes has remained robust, with our average private sales rates for the period being c.1% ahead year on year. Our customer satisfaction score is currently 92%.

“We have some exciting new sites coming into the business at industry-leading margins, with a land replacement rate for the period of over 130% and expanded production in our own brick, tile and timber frame factories, is further enhancing our supply resilience and cost efficiency, enabling us to re-iterate our guidance of 14,500 – 15,000 legal completions for the full year.

”We are on track to achieve a c.10% increase in our active outlets by the end of the current year as we work to rebuild our outlet position after a land buying pause three years ago and are tackling the on-going challenges in the planning system.

“We are stepping up proactive engagement with local authorities, enhancing our approach to developing attractive communities and raising the bar on design to help mitigate planning challenges. We continue to expect our volume delivery to be significantly higher in the second half of the year.

“Our combination of compelling affordability and high levels of service and build quality, coupled with our well-located sites provides a uniquely strong and sustainable customer proposition.

“It is by strengthening this proposition further that we will achieve our ambition of becoming Britain’s best homebuilder for both customers and shareholders, consistently delivering high quality homes, excellent customer service and industry-leading financial returns.”

Building an even stronger business

Robust first half performance:

• Robust first half performance against strong comparator – profit before tax of £439.7m (2021: £480.1m);
• Managing the balance of inflationary pressures effectively – housing gross margin up on same period last year (31.0% vs 30.9%);
• Average private sales rate for the period was c.1% ahead year on year;
• Underlying return on average capital employed of 30.9% (December 2021: 35.8%) – over the last 3 years the Group’s underlying return on average capital employed has been 34.2% reflecting the sustained success of the business;
• 235p per share paid in respect of the year ended 31 December 2021.

Placing customers at the heart of our business:

• Persimmon Way fully embedded across the business and operating well;
• HBF 8-week customer satisfaction score currently 92%;
• Trustpilot score improved by 30% since the start of the year;
• NHBC Reportable Items improved by 25% since December 2020;
• Largest team of independent quality inspectors in the industry providing quality assurance on each of our homes;
• New product range, marketing rebrand and service enhancements are strengthening our offer to customers to meet their aspirations and earn their trust and loyalty;
• Our average private selling price of £267,325 is c.20% below the UK’s national average selling price, demonstrating the enduring strength of our value offer to customers.

Building a strong platform for success:

• High quality land holdings, with 89,052 plots owned and under control at 30 June 2022 (December 2021: 88,043), with a land cost to anticipated revenue ratio of 12.2% (December 2021: 11.9%);
• Disciplined land replacement – 8,829 plots brought into the business across 37 locations at industry-leading margins;
• On track to achieve a c.10% increase in our active outlets by the end of the year, with 60 opened in the first half and around 70 forecast to open in the second half of the year, although on-going planning delays continue to present risk;
• Build rates improved by c.10% compared with pre-Covid levels;
• Continuing to invest in our people – around 90% of our site colleagues have achieved a relevant NVQ qualification (December 2020: 21%) and we have been recognised as a Top 100 Apprentice Employer.

Driving value:

• BrickWorks, TileWorks and Space4 factories all increasing output, providing supply resilience and efficiency;
• Enhanced data and management tools introduced to drive greater consistency in build times and quality;
• Strengthened centralised procurement driving efficiencies and pooling shared resource to manage supply challenges.

Our communities:

• Delivering homes around 30% more energy efficient than existing housing stock making them more cost efficient to run for our customers;
• Invested over £610m in local communities over the last 18 months, delivering 3,632 homes to our housing association partners;
• Continuing to protect leaseholders from the cost of cladding removal; five of our developments have secured EWS1 certificates. Proactively engaging with Management Companies and their agents on works required on all other identified developments built by Persimmon.

Outlook:

• Demand is strong with the Group’s average private sales rate in the period around 1% ahead year on year and a robust forward order book of £2.32bn;
• Robust start to the second half; average private sales rates for the first seven weeks 11% down year on year against a strong comparator and as we return to a more normal seasonal pattern, and up 8% on 2019 being the most recent, more typical trading year;
• Currently over 90% forward sold for the current year;
• Sales price inflation currently mitigating the cost inflation the industry is experiencing;
• Continue to target around 10% growth in outlets by the end of the current year, with enhanced placemaking and design approach and proactive local authority engagement expected to mitigate on-going planning challenges;
• Re-iterate our guidance of 14,500-15,000 completions for the full year;
• While near-term uncertainties continue the longer-term fundamentals remain strong. Our work to become Britain’s best homebuilder will build an even stronger and sustainable business delivering for customers and shareholders alike.

Kindly shared by Persimmon Homes

Main photo courtesy of Pixabay