Persimmon revenue down 9% to £3.3bn; shares fall

Shares of York-based house building giant Persimmon plc fell about 5% on Wednesday after it published a trading update ahead of its final results for the year ended December 31, 2020, showing revenue fell 9% to £3.33 billion and sales slowed “towards more normalised levels.”

New home completions were 13,575, down from 15,855 in 2019.

Persimmon said: “The group’s average weekly sales rate during the final quarter of the year trended towards more normalised levels from the elevated rate seen over the summer months, the latter having been supported by the group’s prior investment in stock and a degree of pent up demand.

“As a result, the group’s sales levels over more recent weeks reflect lower active outlet numbers and some constraints on stock availability, together with delays to reservations while first time buyers awaited the opening of the new Help to Buy scheme on 16 December 2020.”

Forward sales at December 31 were £1.689 billion, about 25% ahead of last year.

Persimmon said its liquidity remains strong with cash balances of £1.2 billion after returning £351 million to shareholders during the year.

Persimmon CEO Dean Finch said: “Against the backdrop of the unprecedented challenges of 2020, Persimmon produced a robust performance for the year, as we continued to deliver the new homes the country needs.

“The group’s strong second half completions were supported by its advanced build coming into the year, an agile and effective response to the Covid-19 pandemic and resilient customer demand …

“Recent events have served to further demonstrate the continuing near term uncertainties arising from the Covid-19 pandemic.

“However, we believe that the longer term fundamentals of the UK housing market remain resilient and I am confident Persimmon will continue to deliver superior long term value for all of its stakeholders.”

Steve Clayton, Manager of the Hargreaves Lansdown Select UK Income Shares fund, which holds a position in Persimmon said: “Persimmon enjoyed a strong bounce-back when pandemic-driven restrictions on trading were lifted mid-year.

“Since then it has bolstered its balance sheet through robust cash generation and a forward sales position of roughly half a year’s expected revenues.

“At this stage, with the end of the stamp duty holiday in sight, taking a cautious view of the immediate outlook is the right approach, but we have seen more bullish outlooks from some of the group’s rivals.

“Persimmon have also left investors waiting until their full year results in early March for news on the group’s dividend intentions.

“So perhaps no surprise then to see the shares a little weaker in early trading.”