Housebuilding giant Persimmon reveals that annual profits have more than halved

New home completions slowed markedly to 9,922 from 14,868 in 2022. The group said the housing market is set to “remain subdued” and “challenging” in 2024, with little sign of a pick-up ahead of a general election and with interest rates still at their highest since the 2008 financial crisis.

Persimmon said it has seen a slight increase in demand at the start of 2024 as mortgage costs have eased back a little, with its weekly net private sales rate per outlet rising to 0.59 from 0.54 a year ago. But it said it is having to use incentives to boost demand, such as part-exchange deals.

Dean Finch, the group chief Executive, commented: "The group successfully navigated the challenging market conditions in 2023. Completions were ahead of expectations, margins were industry-leading, we maintained our strong balance sheet and we continued to deliver further improvements in our product quality and service.

He added: “Although the near-term outlook remains uncertain, the significant pent-up demand for homes remains unchanged. Customers want quality homes in the places where they want to live and work, and affordability is crucial.

"During the year we have continued to take further steps to strengthen the business and we are well placed to meet this demand through our three excellent brands offering different price ranges with overall private average selling prices that are below the market average. The investments and operational changes that we have made in the past few years mean that we are trusted by our customers to deliver consistently high-quality homes.

“We can achieve this while positioning the business to maintain industry-leading financial returns as markets recover, supported by our vertically integrated business model, strategic land buying and disciplined approach to cost control. Through further investments in innovation, I believe we can build even higher quality homes better, faster and more efficiently over time.

“We are well placed to manage the ongoing uncertainty and we have good visibility over our land pipeline which, over the medium-term, will support a return to growth in outlets and volumes, alongside improved margins and robust cash generation, paving the way for sustainable shareholder returns."

Oli Creasey, property research analyst at Quilter Cheviot, said: “Persimmon’s fully year results show that 2023 was a tough year for the housebuilder. House prices were up 3 per cent, but most other metrics moved in the wrong direction, notably sales volumes, which were down 33 per cent year-on-year. Revenue fell 27 per cent, and the operating margin almost halved to 14 per cent. However, most of this was known or expected; 2023 was a tough year for housebuilders and buyers in general. What is of greater concern for shareholders is that the outlook for 2024 isn’t really any better.”