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).
Persimmon said its private forward sales position has increased to £1.14 billion with a private average selling price of £283,000 up 6% since the start of the year.
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.
“As previously noted, first-half performance will be subject to embedded build cost inflation and lower average selling prices, as reflected in the forward order book at the start of the year.
“This trend is expected to reverse in the second half, given the increase in the average selling price in the current forward order book and broadly neutral build cost inflation since the start of the year.
“We continue to expect growth in full year 2024 completions to between 10,000 and 10,500 completions with an operating margin in line with the prior year.”
Persimmon CEO Dean Finch said: “Trading over recent weeks has been encouraging with robust visitor numbers and enquiries, giving us confidence for the remainder of the year.
“Overall, our private forward order book is up 18% on the prior year with the embedded private average selling price ahead of the position at the start of the year.
“We are making good progress in expanding our outlet network and we will continue to position the business for success, maintaining our focus on quality and customer service, and converting our land holdings into active developments.”
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.”