Persimmon (PSN) Q3 2024 TU earnings summary

Executive summary

• Forward order book up 17% year-over-year to £2.02bn, with private order book up 40% to £1.45bn; private ASP in the forward order book is up 10% year-to-date and 5% year-over-year, reaching £291,400.

• On track to deliver approximately 10,500 completions in 2024, up from 9,922 in 2023, with 85% already exchanged or completed; strong sales rates and improved customer confidence driven by higher wages, lower interest rates, and greater mortgage availability.

• Significant self-help initiatives, including land acquisition, service and quality improvements, and vertical integration, position the business for rapid growth in volumes and profits in 2024 and beyond.

• Customer demand remains strong, supported by improved affordability and greater availability of high loan-to-value mortgages.

Financial highlights

• Incentives remain at 4-5% of ASP, with a range of 2-7% depending on site performance; most customers expect some form of incentive.

• Q3 average outlet number was 264, with nearly 100 new outlets expected to open by year-end.

• Q4 is expected to account for 43-44% of annual completions due to timing of outlet openings.

• Margin for 2024 expected to be similar to last year, with no change in guidance; embedded margin of the land portfolio described as excellent.

• Cash balance at year-end is anticipated to be between £100m and £200m.

Outlook and guidance

• Expectation of continued volume and margin growth in 2025, though margin recovery will be tempered by historic build cost inflation and regulatory costs.

• Budget and macroeconomic factors, including mortgage rates and National Insurance increases, introduce uncertainty and potential cost headwinds.

• Land creditors expected to be higher at year-end due to increased land acquisition activity.

• Early government planning reform announcements are seen as positive, with further consultation outcomes awaited.

• Pipeline of new sites and three strong brands position the business for continued market improvement.