Persimmon sales hit pre-pandemic levels

Persimmon has made a strong start to the year, with sales completions returning to pre-pandemic levels, according to a trading update which covers the period from 1 January 2021 to 30 June 2021.

Highlights

• 7,406 legal completions (2020: 4,900, 2019: 7,584)
• Total revenue of £1.84bn (2020: £1.19bn, 2019: £1.75bn)
• Forward sales of £1.82bn (2020: £1.86bn, 2019: £1.62bn)
• 285 active sales outlets on average throughout the first half with c. 85 forecast to open in H2 2021
• Cash of £1.32bn (2020: £0.83bn) and land creditors of c. £365m (2020: £374.5m)

Dean Finch, Group Chief Executive, said: “Persimmon performed well during the first half of the year delivering new home sales completions approaching the levels achieved in the first half of 2019. I am particularly pleased that we are continuing to achieve pre-Covid build rates across our sites whilst successfully maintaining higher levels of build quality and customer service. Our current HBF customer satisfaction score is 91.9%, with Persimmon’s monthly performance trending ahead of five star for the last eighteen months. We are providing much needed new homes to our customers whilst continuing to drive forward our ambition of building right, first time, every time.

“Customer demand for our new homes has been strong right across the UK with healthy sales reservation rates through the period. The Group has an excellent forward order book at the end of June of £1.82bn.

“In supporting the Group’s high quality growth we are taking advantage of attractive land investment opportunities and successfully brought over 10,000 new plots into the business across 48 locations in the period. We remain focused on progressing our pipeline of new sales outlets through the planning system and into production, and on our ongoing build programmes, to provide improved stock availability and choice for our customers.

“Persimmon is well placed for the future with a strong balance sheet and healthy liquidity. As such, we are pleased to announce the accelerated payment of the surplus capital distribution of 110p per share in respect of the year ended 31 December 2020, which will be paid on 13 August 2021.”

Trading review

Total revenues for the period were £1.84bn (2020: £1.19bn, 2019: £1.75bn). The Group delivered 7,406 new homes to its customers (2020: 4,900, 2019: 7,584), generating housing revenues of £1.75bn (2020: £1.10bn, 2019: £1.65bn). The Group’s total average selling price has increased by 4.9% over the first half of last year to c. £236,200 (2020: £225,066, 2019: £216,942) reflecting the stronger market conditions experienced throughout the period. This includes 6,104 sales into the owner occupier market with an average selling price of c. £258,200 (2020: £246,208, 2019: 242,912). Currently this house price growth is mitigating the effect of the upwards pressure being experienced on the industry’s cost base.

“UK housing market fundamentals remain supportive with low interest rates, improving levels of mortgage availability, ongoing Government support and strong customer demand,” the update said. “The Group’s average weekly private sales rate per site for the first half was over 30% ahead of 2020, the increase reflecting the unprecedented site shutdowns in 2020 due to the pandemic, but was also c. 20% ahead of 2019.

“We continue to focus on advancing our build programmes to improve the level of stock availability and choice for customers. The implementation of the Group’s consolidated approach to construction, the Persimmon Way, is reinforcing the consistent application of our quality assurance processes, which is instrumental in delivering high quality homes to our customers.

“We are pleased with the build rates being achieved by the Group, which returned to pre-Covid levels by the end of June 2020 and are now following the normal seasonal pattern. The Group had work in progress of c. 4,800 equivalent units of new home construction at the end of June (2019: c. 6,150), reflecting the strength of legal completions over the last twelve months, the anticipated reduction in the number of sales outlets and the effect of the lower construction activity in the first half of 2020 due to the initial measures introduced to mitigate the impact of the pandemic.

“Persimmon’s balance sheet and liquidity remain robust. The Group held £1.32bn of cash at 30 June 2021 (30 June 2020: £0.83bn) with deferred land commitments of approximately £100m to the end of the current year. In addition, the Group has an undrawn £300m Revolving Credit Facility which has recently been extended, having a five year term out to 31 March 2026.

“The Board recognises the positive impact the vaccination roll-out programme is having on the UK’s economic performance and prospects. However, as the pandemic continues we remain mindful of the on-going uncertainties regarding the UK economy, including employment levels, consumer confidence, and the supply chain impacts of both Brexit and the pandemic.

“Despite this, the longer term fundamentals of the housing market remain strong and, with the Group’s UK wide network offering new homes at compelling value, we are confident of Persimmon’s future success. Our long-term strategy, which recognises the risks associated with the cyclical nature of the housing market by maintaining operational flexibility, investing in high quality land, minimising financial risk and deploying capital at the right time in the cycle, will continue to ensure that the Group is well positioned for the future.”