Persimmon’s profits halve to £352m but Group remains confident in long-term prospects

The company said 2024 “would not be easy”, but it remained confident in the long-term prospects for the Group.

The company, which posted its annual results this week, generated total revenues of £2.77bn in 2023 (2022: £3.82bn). Overall, it delivered 9,922 legal completions (2022: 14,868) with a reduction in the new housing gross margin to 20.5% (2022: 30.9%),

Its current forward sales position is £1.55bn, including £946m of private forward sales with a private average selling price of c.£280,000. 

On average, Persimmon’s 2023 overall build rates tracked 28% lower in the year, with an average of 198 equivalent units of build per week, compared to 276 per week in 2022. 

“We start 2024 with a significant level of work in progress, with 4,170 equivalent units of build on the balance sheet,” it said.

“Overall, we expect to deliver between 10,000 and 10,500 completions in 2024 with a housing operating margin in line with 2023.”

On 31 December 2023, the carrying value of the Group’s land assets was broadly in line with the prior year at £2.1bn (2022: £2.09bn).

“As expected at the start of the year, the number of new home completions and profit delivery of the Group was significantly down on the prior year, reflecting a difficult macroeconomic backdrop,” it said. 

“While demand remains high, affordability and mortgage availability has been difficult for many of our customers, especially first-time buyers. Thankfully, there has been some stabilisation in recent months with mortgage rates having fallen from their peak in July 2023.

But while Persimmon said 2024 would not be an easy year, it remained very confident of the exciting long-term prospects for the Group.

“Persimmon does not currently anticipate a major improvement in market conditions in 2024, with a general election likely this year and interest rates expected to remain at current levels for some time.”

In June 2023 Persimmon secured planning permission for its new Space4 factory in Leicestershire. This next-generation factory, expected to be in full operation by the end of 2025, will use advanced automation to provide up to 7,000 units a year and allow even more of the timber frame to be built in the factory. 

The existing Space4 factory produces timber frames, insulated wall panels and roof cassettes from a factory in Castle Bromwich near Birmingham, with a capacity between 5,000 and 7,000.

It invested in modular builder TopHat in April 2023 to give potential to leverage both its modular units on Persimmon sites as well as utilise its advanced brick facade with Persimmon's Space4 timber frames.