Persimmon reports resilient demand for new build homes despite pandemic

In a third quarter trading update, Persimmon said the average private weekly sales rates per site for the period was 38 per cent ahead of 2019.

Dean Finch, the group chief executive, commented: “Persimmon continues to perform robustly despite the significant challenges presented by the Covid-19 pandemic and we are currently on course to deliver a good result for 2020.

“The health and safety of our colleagues, customers and communities remains our top priority and we have been carefully following each of the devolved Government’s measures to curb the spread of the pandemic.

"In England’s second lockdown, our Covid-secure sales offices, sites and manufacturing facilities are remaining operational, in line with Government guidance, as we continue to support our customers and deliver their new homes.

“In my first weeks as CEO I have been getting around the group to understand the business better, including the significant opportunities we have ahead of us. Throughout the organisation, the team’s focus on quality and serving our customers has been impressive.

“Our commitment to helping to level up opportunities and to supporting our communities, through initiatives such as the Social Mobility Pledge, are more crucial than ever as we strive to deliver much needed new homes across the country, and to support the UK economy’s recovery from the impacts of the pandemic.

“Persimmon is undoubtedly a strong market leader with an excellent management team and workforce, and significant high quality assets. The task in front of us is to continue to build a sustainable business in every sense – one that can maintain a strong financial performance whilst continually improving customer service, and fulfilling our important role in the economy, in our communities and for the environment.”

Persimmon said it had a strategy of careful management of the housing cycle through minimising financial risk and investing capital at the right time. Around 1,700 plots of land have been secured in the year to date.

The statement added: "The sustainability committee continues to make good progress against the group’s strategy of ensuring that the business delivers long term sustainable benefits for all stakeholders. It has recently engaged an independent expert to assist in setting a science based carbon reduction target.

"Reflecting the group’s continuing strong performance, a further interim dividend of 70p per share will be paid on 14 December 2020, which together with the interim dividend of 40p per share paid in September, replaces the previously postponed 110p per share final dividend declared for 2019."

Persimmon said that trading through the summer weeks was robust, with sales rates remaining strong thanks to good availability of homes at an advanced stage of construction.

The statement added: " The group’s increased investment in work in progress over the last eighteen months was designed to position the business to be able to support more customers to achieve their aspiration of owning a newly built home, putting the business in a good position to satisfy this demand.

"Demand for new homes has remained resilient despite the continued challenges surrounding the Covid-19 pandemic, the UK economy and the uncertainty relating to the nature of the UK’s future global trading arrangements.

"The group’s average private weekly sales rate for the period was c. 38% higher than last year driven by the strength of the group’s gross sales levels net of slightly higher cancellation rates. As anticipated, as the wider housebuilding industry has gradually returned to greater activity, the group’s market share has started to trend towards more normal levels in recent weeks, although sales rates remain ahead of the prior year.

"We remain confident that legal completions in the second half of this year will be at least in line with the second half of 2019, supported by robust build rates, subject to there being no significant disruption to the construction industry due to additional measures introduced to control the pandemic."

The statement added: "Persimmon plays an important role in providing much needed homes, job opportunities and wider support to our local communities.

"The group’s affordable price points provide ‘homes for all’ and access to the housing market for customers wanting to move into their first home.

"Our private average selling price of £246,208 at 30 June 2020 (2019: £242,912) is c. 19%2 below the UK national average and approximately 50% of our private home completions for the 10 months to 31 October 2020 have been to first time buyers. In addition to providing new homes, our activities support a directly employed workforce of c. 5,000 and a further c. 50,0003 jobs across our communities and within our wider supply chain."

The statement added: "We believe the longer term fundamentals of the UK housing market remain favourable. However uncertainties remain including those posed by further Covid-19 disruption, rising unemployment and the potential impact of the outcome of trade negotiations with the European Union and the rest of the world.

"Persimmon’s strategy of providing good quality homes, delivering wider community benefits, minimising financial risks and deploying capital at the right time in the cycle provides a strong platform to navigate these unprecedented circumstances and continue to deliver sustainable returns for the benefit of all of the group’s stakeholders."

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