Persimmon sees FY profit at upper end of expectations
By Michele Maatouk
Date: Tuesday 14 Jan 2025
(Sharecast News) - Persimmon said on Tuesday that full-year underlying pre-tax profit was set to be around the upper end of market expectations as completions were ahead of market forecasts.
In an update ahead of final results for the year to the end of December, the housebuilder said completions rose 7% on the previous year to 10,664 homes. This was driven by an 18% jump in private home completions to 9,075, with 1,589 partnership homes delivered in the period, up from 2,241.
Meanwhile, the average selling price ticked up 5% to around £268,500. Persimmon said pricing improved as the year progressed, largely due to mix, but also reflecting "improving market conditions".
The company's forward sales position increased 8% to £1.15bn.
It now expects full-year underlying pre-tax profit for 2024 to be around the upper end of market expectations of £349m to £390m, with underlying operating margins similar to the prior year, in line with previous guidance.
Chief executive Dean Finch said: "Customer enquiries and sales rates have been consistently ahead of the prior year since the spring selling season.
"Persimmon has worked hard and is well positioned for the future, supported by the land and planning investment we have made in recent years, our vertical integration capabilities and our excellent teams. This investment, coupled with the government's ambitious planning reforms which demand more of the high-quality, affordable homes which are Persimmon's core strength, supports our growth ambitions in the medium-term."
At 0930 GMT, the shares were up 6% at 1,118.76p.
Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said: "Persimmon's 2024 trading round-up showed it's sitting on solid ground, despite the group having faced its fair share of struggles in recent years. From their peak, both volumes and operating margins have fallen much harder than the broader sector. But Persimmon looks to have turned a corner. New home completions and average selling prices both exceeded market expectations, up around 7% and 5% respectively last year, as buyer demand was consistently higher throughout 2024. That's given the group a solid platform to build on over the rest of 2025.
"Looking ahead, the order book is in a healthy position at an impressive £1.1bn, giving decent near-term revenue visibility. The potential of rising build cost inflation had been an area of concern heading into these results, but the low single-digit outlook for 2025 is a challenge that Persimmon should be able to navigate with ease. Its in-house materials business is a key differentiator from peers and should offer the necessary protection from this.
"Despite all the positive news, recent macroeconomic and geopolitical uncertainties haven't been favourable. The timing of future interest rate changes and the impact they may have on consumer confidence could have a big impact on how quickly a recovery in the housing market materialises. But with a large land bank, low average selling prices and the valuation sitting some way below its long-run average, this could mark an opportunity for long-term investors."
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