Persimmon (LON:PSN) told shareholders that it expects full-year sales to be down, but that profits will meet expectations.
Persimmon’s share price is trading at 2,823p (+0.97%). 15/1/20 10:47BST.
Sales for the full year are expected to total £3.65 billion, down 2.4% from £3.74 billion a year ago, the company said.
In particular, new housing revenue fell 3.5% year-on-year to £3.42 billion, and the number of new statutory completions fell 3.6% from 16,449 to 15,885.
The company said average sales prices remained unchanged in 2018, when political uncertainty hampered the real estate development market.
Average sales price rose 0.1% to £215,700 from £215,563.
At Westbury Partnerships, which sells social housing to UK housing associations, average sales prices rose 1.3% year-on-year from £117,653 to £119,150.
Persimmon said Westbury Partnership contributed 21% of group sales in 2019, up from 19% in 2018.
Reflecting on the new year, the company told shareholders it will enter 2020 with sales totaling £1.36bn, down 2.9% from the previous year’s £1.4bn.
Persimmon added that there were 365 construction developments, which is flat year-on-year, and that it expects to open 80 new sites in the first half of 2020.
Comments from Dave Jenkinson, Group Chief Executive Officer
“Persimmon continues to make good progress in implementing its customer care improvement plan, which is centered around a focus on customers over volume, with statutory new home completions down 4% in 2019 compared to last year. did.
“Delivering the maximum benefit to our customers from our commitment to improving quality and service continues to be my top priority in 2020. I am pleased with the progress we made in 2019, but there is still work to be done. The measures taken to maintain increased levels of ongoing investment, increased quality assurance and customer service resources, and plans to implement the recommendations of a recent independent review will all further build on our momentum. It will be.
“While our plans to achieve continuous improvement in quality go far beyond focusing on the standards of the HBF Customer Satisfaction Survey, current ratings trend well above the four-star standard. This is clear evidence that we are making improvements.” Persimmon introduced the industry’s first customer retention scheme in July 2019, and we intend to make further leaps forward this year.
“I am encouraged by the enthusiasm and commitment of the entire Persimmon team to make the necessary step changes to deliver higher levels of quality and service to our customers.Persimmon is positioned to build and sell a strong future. , combined with strong liquidity and industry-leading land holdings, I am confident of the group’s future success.”
The company also announced that Claire Thomas will step down as non-executive director to pursue other interests. Thomas is scheduled to leave Persimmon on February 1, 2020.
Mr. Thomas, who joined Persimmon’s board in August 2019, said: “While I have loved being a member of the Persimmon Board and the experience it provides, it has also become clear to me that I prefer working in a large, complex, global business environment. During my time on the Board, I have seen a clear and determined effort to transform the business, and I wish Persimmon every success in its continued efforts.”
Chairman Roger Devlin said: “Claire has made a significant contribution to the board during her tenure and we are sad to see her leave. We wish her every success in the future.”
Optimism is somewhat rewarded for Persimmon.
In early November, the company reassured shareholders that it could perform in a market hit by the complexities of Brexit.
Persimmon joins companies such as Walmart (NYSE:WMT) and Morrisons (LON:MRW)’s Asda in saying the complications of Brexit are hampering their operations.
Persimmon reported that summer trading was in line with expectations, due to strong trading and consumer resilience.
In the second half of 2019, Persimmon commented on a “resilient” trading pattern and hinted at a full sales allocation for the year.
Around £950m of forward sales have been secured since 2019, compared to £987m at this time a year ago. Despite a decline in forward sales, the housing market remains depressed as home price growth slows.
The number of units sold in the first half of 2019 was 7,584 units, down 6% year-on-year, due to the company’s approach of selling only homes in advanced stages of construction. Persimmon expects sales in the second half to exceed the first half.
Taylor Wimpey – Persimmon’s rival
Yesterday, Taylor Wimpey’s (LON:TW) rival told the market that it expected its results to be in line with expectations.
FTSE 100 traders said the housing market remained stable last year but faced challenges in London and the south east.
Taylor Wimpey noted that the number of completed homes in 2019, including joint ventures, rose by 5% to 15,719.
“2020 continues to be a year of change for the UK, but we welcome the increased political stability following the general election,” the company said.
“We started the year with a strong order book and continue to aim for a smoother completion profile throughout the year, but we expect the second half of 2020 to continue to be heavily weighted,” the homebuilder said.
2019 ended with a record total order value of £2.17m, which marked a rebound from the £1.78 figure a year earlier.
The housebuilder said it continues to generate cash and intends to return £610m to shareholders in the form of dividends.
Operating profit for the period decreased by 9.4% to £311.9m due to higher construction costs and geographical mix.
While the UK property and housebuilding markets are still grappling with tense Brexit relations, shareholders shouldn’t be too worried as Persimmon has maintained stable profits despite falling revenues.
