Persimmon ‘encouraged’ as order book rises 18%

York-based house building giant Persimmon plc said in an AGM statement that it traded in line with expectations during the first quarter of 2024, delivering a total of 1,027 homes (Q1 2023: 1,136 homes).

This included 852 private homes (Q1 2023: 902 homes) and 175 Partnership homes (Q1 2023: 234 homes).

In its outlook, Persimmon said: “We are encouraged by the level of visitors to our sites and are making good progress in expanding our outlet network.

“We opened 28 gross outlets in the first quarter ending the period with 263 outlets, up 2% on the position at the start of the year.

“A further c.30 gross outlets are planned to open by the end of June as part of our ambition to build back to pre-Covid outlet levels over the medium term.

Aarin Chiekrie, equity analyst at Hargreaves Lansdown said: “After a shaky 2023, Persimmon’s first-quarter trading has laid the foundations for a solid year ahead.

“Performance has been in line with management’s expectations, with sales rates ticking slightly higher while pricing has held firm.

“Given Persimmon’s houses are typically cheaper than the UK average, its selling prices were always likely to prove more resilient than other names in the sector during tough times.

“The private order book has also climbed at double-digit rates, indicating that buyers have more confidence about the health of the market than they did 12 months ago, so are more willing to sign on the dotted line.

“Alongside its in-house materials business, which is a key differentiator against peers, Persimmon’s profitability might just hold up better than most this year.

“Despite all the positives, there’s still plenty of uncertainty in the UK housing market.

“High mortgage rates and the removal of the Help-to-Buy scheme continue to weigh on buyer affordability, meaning there’s unlikely to be a step-change in fortunes in 2024, with markets expecting revenue to remain broadly flat year-on-year.

“With all of the current pressures, it’s not surprising to see the valuation below its long-run average.

“But broadly speaking, Persimmon’s still trading at a premium to most of its peers, meaning investors searching for value would be wise to look at other names in this cyclical sector.”