TIDMPSN
RNS Number : 2771Y
Persimmon PLC
13 January 2022
TRADING STATEMENT
THURSDAY 13 JANUARY 2022
Persimmon plc today announces the following update ahead of its
Final Results for the year ended 31 December 2021, which will be
released on 2 March 2022.
Highlights
Dean Finch, Group Chief Executive, commented:
"Persimmon's performance has been excellent through the year,
delivering high quality growth. I would like to thank my colleagues
and our wider workforce for their hard work and commitment in
achieving the Group's strong performance. Whilst continuing to
provide five star levels of customer satisfaction the business
provided 14,551 new homes at an anticipated full year underlying
operating margin of c. 28%(1) , maintaining our industry-leading
performance.
"We have continued to secure high quality land opportunities,
bringing over 20,500 new plots into the business in 2021
representing in excess of 140% of current consumption levels. This
strong pipeline provides excellent momentum for the Group's future
growth. Our teams are working diligently to bring these sites into
construction as soon as possible to enable us to deliver much
needed homes across the UK.
"Whilst the industry continues to face the ongoing operational
and economic challenges as a consequence of the pandemic,
particularly as the Omicron outbreak unfolded in the last six weeks
of the year, the Group continues to manage these ongoing challenges
comprehensively. The long term fundamentals of the UK housing
market remain strong and I am confident of Persimmon's future
success."
Highlights
2021 2020
New home completions 14,551 13,575
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Average selling price c. GBP237,050 GBP230,534
--------------- ---------------
Total Group revenues GBP3.61bn GBP3.33bn
--------------- ---------------
New housing revenues GBP3.45bn GBP3.13bn
--------------- ---------------
Cash at 31 December GBP1.25bn GBP1.23bn
--------------- ---------------
Current forward sales position GBP1.62bn GBP1.69bn
--------------- ---------------
Dividend paid in the year 235p per share 110p per share
--------------- ---------------
Trading
Persimmon has delivered total Group revenues of GBP3.61bn,
(2020: GBP3.33bn) in the year. New housing revenues of GBP3.45bn
were c. 10% ahead of last year (2020: GBP3.13bn) and c. 1% ahead of
2019 (2019: GBP3.42bn). As expected, new home legal completions of
14,551 were c. 7% ahead of the prior year (2020: 13,575) and
included 12,018 new homes sold to private owner occupiers (2020:
11,363). The Group's average selling price increased by 2.8% over
last year to c. GBP237,050, reflecting in part the greater
proportion of new homes sold to our housing association partners
compared with last year. At c. GBP259,200, the average selling
price of our new homes sold to owner occupiers was c. 3% ahead of
the prior year (2020: GBP250,897), the underlying improvement in
selling prices being diluted to a degree by the year on year
changes in the regional mix of sales achieved. However, with the
second half benefitting from the particular mix of legal
completions achieved in the period, we anticipate the Group's
industry-leading underlying operating margin for the full year will
be c. 28%(1) (2020: 27.6%).
The Group delivered 2,533 new homes to its housing association
partners representing 17.4% of total homes delivered, an increase
from 16.3% last year. We look forward to delivering further growth
in sales to our housing association partners as the Group brings
through its new outlets planned for 2022 and beyond.
The Group has seen good levels of demand throughout the second
half of the year underpinning positive pricing conditions. The
Group's sales rates were c. 20% higher than those in the second
half of 2019 (a more comparable period given the pandemic-related
disruption to the industry in 2020) reflecting Persimmon's
positioning in a strong market. Our customer enquiry levels have
remained encouraging throughout the period despite the changes in
the Government's Help to Buy scheme and the stamp duty regime.
Cancellation rates have remained in line with historical low levels
throughout the period.
The business has managed the ongoing challenges of the pandemic
well, including disruption to the supply chain and customer support
services which increased in the latter part of 2021 with the onset
of the new Omicron variant. The corresponding updated Government
guidance has led to a pick-up in sickness related absenteeism, with
some customers also choosing to delay moving into their new home as
they isolated in line with best advice. Through these challenges,
the Group maintained its focus on delivering high quality homes
consistently to our customers.
Our vertical integration through our Brickworks, Tileworks and
Space4 timber frame manufacturing facility has continued to assist
in securing supply of key materials. As indicated, we anticipate
that our industry leading margins will remain resilient after
recognising the expected increase in our build cost inflation of c.
5.0% in 2021.
Persimmon traded from c. 285 active outlets on average in the
second half compared with c. 305 in 2020. The Group continues to
bring new land through into construction although there have been
delays to some outlet openings due to the slower planning system
experienced across the industry. At the end of the year the Group
had 290 developments under construction across the UK reflecting
the combined effect of both the healthy sales rates we have
achieved and the planning delays. The Group has a strong pipeline
of sites progressing through the planning system and our teams are
focused on opening these new outlets into the traditionally strong
spring season, taking advantage of the healthy levels of interest
already expressed by customers.
The Group's forward sales at 31 December 2021 were GBP1.62bn, c.
20% ahead of 2019 (2019: GBP1.36bn) (2019 being a more comparable
year due to the pandemic-related disruption to 2020).
We have maintained our well-established disciplined land
replacement whilst continuing to take advantage of exciting
opportunities in the market. Over 20,500 plots have been brought
into the business during the year, representing over 140% of
current consumption levels, strengthening the Group's UK wide
network. The Group's land spend for the year to date is c. GBP460m
(including c. GBP180m of deferred land creditor payments).
The Group's balance sheet and liquidity remain robust. The Group
held GBP1.25bn of cash at 31 December 2021 with deferred land
commitments of c. GBP400m. In addition, the Group has an undrawn
GBP300m Revolving Credit Facility which has a five year term out to
31 March 2026.
Continuing to support our customers
The Group places customers at the centre of our business as we
strive to 'build right, first time, every time'. Whilst achieving
good rates of construction we continue to control the timing of
release of homes for sale on new developments and existing sites to
ensure we can provide both greater predictability of "moving-in"
date to support higher levels of customer satisfaction, and to
maintain build quality. The Persimmon Way, our end-to-end
consolidated construction process, is operating well across the
business.
The expansion of the Group's team of Independent Quality
Controllers is delivering the anticipated benefits of strengthening
site supervision, assisting site management teams in monitoring
build at key construction stages and providing further guidance and
training, as well as enforcement of the Group's quality standards.
As planned, this is now also being complemented with the external
verification of our processes with the aim of covering all the
Group's operating companies by summer 2022. We welcome the
appointment of a New Homes Ombudsman partner and the publication of
the New Homes Quality Code, which was published on 17 December
2021, and their aim of driving up build quality and customer
service standards across the industry. We expect to register for
the new Code shortly.
Our customers are already experiencing the benefits of some of
these improvements. Over 92%(2) of customers that have moved into
their new home since 1 October 2020 for the 2020/2021 HBF survey
year say they would recommend Persimmon to a friend. The Group has
continued to trend ahead of the 90% HBF survey five star threshold
since January 2020.
We share the Secretary of State's aspiration that leaseholders
should not have to pay to remove cladding. Indeed, we made a
commitment a year ago that leaseholders in buildings constructed by
Persimmon, including all those above 11 metres, should not have to
cover the cost of cladding removal. We have constructed only a very
small proportion of buildings affected by this issue. In common
with the rest of the housebuilding industry, we will shortly begin
paying the cladding levy announced in the Budget.
Our communities
The Group is proud to deliver a range of house types making
owning a home accessible for all whilst creating attractive
neighbourhoods for people to enjoy. Our private average selling
price of c. GBP259,200 for the year to 31 December 2021 (2020:
GBP250,897) is c. 18% (3) below the UK national average with c. 50%
of our private home completions for the year having been to first
time buyers.
FibreNest, the Group's ultrafast, full fibre broadband service,
continues to grow, serving c. 20,500 new households across c. 260
of our developments. The service, which is highly rated by our
customers, is becoming increasingly important as families rely on
it to support their efforts to work from home and to access
essential services online.
Minimising our environmental impact
Persimmon is committed to playing its part in reducing
greenhouse gas emissions, helping to create an enduring sustainable
legacy for future generations. Earlier in the year, the Group set
science based carbon reduction targets, in line with the Paris
Agreement, which were fully accredited by the Science Based Targets
Initiative. It also set ambitious 'net zero' targets, aiming to
deliver 'net zero' homes in use to its customers by 2030 and become
'net zero' in its operations by 2040.
Our homes are already significantly more energy efficient than
existing housing stock and our pathway to 'net zero' homes in use
by 2030 has clear interim milestones. For example, prior to the
full implementation of the Future Homes Standard, there will be a
step change to improve the energy efficiency of our homes which
will increase by a further c. 30% as we improve the fabric
efficiency of our homes, install more efficient heating systems and
increase usage of solar PV.
The Group has already made good progress on its carbon reduction
roadmap with a number of projects to research the most effective
method of delivering a 'net zero' home in use and engaging a third
party expert to measure the embodied carbon of our homes. In our
operations, the Group has introduced electric vehicle options into
its fleet, is now purchasing 100% renewable energy for its offices
and manufacturing facilities and is investigating methods of
reducing the Group's red diesel consumption and increasing the use
of alternative fuels.
Outlook
The longer term fundamentals of the housing market remain
positive with resilient consumer confidence, demand continuing to
outstrip supply across the UK and good levels of mortgage
availability. Some nearer term uncertainties remain as the pandemic
continues. Our vertical integration through our Brickworks,
Tileworks and Space4 manufacturing facilities mitigate some supply
chain disruption risk and the current positive pricing conditions
are anticipated to accommodate potential cost inflation. Interest
rates, whilst anticipated to rise over the short term, remain at
historically low levels, with owning a home, rather than renting,
continuing to be the most affordable option. The Group aims to
continue to focus on helping as many families as possible to
realise their life ambition of acquiring their own home by offering
an affordable range and choice of high quality homes across all our
new developments at compelling prices. The pandemic appears to have
led many customers to re-assess the type of accommodation that they
wish to enjoy. Persimmon is well placed to help communities fulfil
these needs.
Persimmon is in a strong position with industry leading margins
remaining resilient, a strong management team and high quality land
holdings providing an excellent platform for future growth. Our
well established strategy of recognising the risks associated with
the economic cycle and the housing market, minimising associated
financial risk and judging the deployment of capital on high
quality land at the right time in the cycle safeguards a strong
balance sheet and the Group's future success.
We enter the new year with the value of the Group's total
forward sales at GBP1.62bn (2019: GBP1.36bn). The Group's strong
pipeline of outlets adds to the Group's robust platform with c. 75
new outlets forecast to open in the first half of 2022, assuming
the planning system proves supportive.
The Group has maintained pre-Covid build rates throughout the
year, supporting the delivery of the increased volume of new homes
to our customers. We are focused on driving strong levels of build
throughout 2022 and managing the continuing operational challenges
and those associated with the ongoing pandemic to invest further in
Group inventories, add to stock levels and provide compelling
choice for our customers. The Group's level of work in progress of
c. 4,100 equivalent units of new home construction at the end of
the year provides a robust opening position from which the Group
will be able to realise its ambitions for 2022.
We will give an update on our assessment of the housing market
over the early weeks of 2022 when we announce our results for the
year ended 31 December 2021 on Wednesday 2 March 2022.
Persimmon will host a conference call with analysts at 09.00 am
today. To participate please use the details below:
+44 (0) 33 0551
Dial in: 0200
Passcode: Persimmon
For further information please contact:
Dean Finch, Group Chief Executive Kevin Smith Tel: +44 (0) 7710 815
924
Mike Killoran, Group Finance Director Jos Bieneman Tel: +44 (0) 7834 336
650
Persimmon Plc Ellen Wilton Tel: +44 (0) 7921 352
851
Footnotes
1. Stated on new housing revenue and underlying profit from
operations and calculated before goodwill impairment.
2. The Group participates in a National New Homes Survey, run by
the Home Builders Federation. The Survey year covers the period
from 1 October to 30 September. The rating system is based on the
number of customers who would recommend their builder to a
friend.
3. Rolling 12 month national average selling price for newly
built homes sourced from the UK House Price Index as calculated by
the Office for National Statistics from data provided by HM Land
Registry.
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END
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