Persimmon (PSN) Trading Update summary

Market and trading environment

• Sentiment and customer confidence have improved, supported by higher wages, lower interest rates, and better mortgage availability, though affordability remains a challenge, especially in the Southeast.

• Forward order book increased 17% year-on-year to £2.02bn for 8,575 homes, with private forward sales up 40% to £1.45bn and average selling price robust at £291,400.

• Pricing has held firm, with incentives running at 4-5% of ASP; private ASP in the forward order book is up 10% year-to-date and 5% year-on-year.

• On track to achieve approximately 10,500 completions in 2024, up from 9,922 in 2023, with 85% already exchanged or completed and strong sales rates even in more challenged regions.

• Net private sales rate per outlet rose 37% to 0.70 since July, and private reservations year-to-date are up 24%.

Outlook and guidance

• Expecting volume and margin growth in 2025, but margin recovery may be slower due to historic build cost inflation and regulatory changes.

• Regulatory and planning changes, such as costs for nutrient credits and heat pumps, will impact margins in 2025, but are considered temporary as new land purchases factor in these costs.

• National Insurance increases and other budget measures could add up to £15 million in direct and supply chain costs.

• Margin for 2024 expected to be similar to last year, with low- to mid-single-digit build cost inflation anticipated for 2025, mainly driven by labor.

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

Land and operational strategy

• Significant land market activity, with nearly £500 million in opportunities seen in the last three months; land creditors expected to be higher at year-end.

• Land spend in Q3 was £123m, with owned and controlled land holdings at about 81,500 plots as of September 2024.

• Focus remains on self-help initiatives, including growing land holdings, improving service and quality, and driving efficiency through vertical integration and cost control.

• Outlet numbers are increasing, with nearly 100 new outlets expected to open this year and a pipeline of 47 for early next year, though some have planning risk.

• Investment in new factory and vertical integration aims to control costs and address future labor shortages.