Persimmon's AGM will have more positive's than negatives

Published 27th of April, 2022

Persimmon 2022 AGM trading update 

FTSE 100 housebuilder Persimmon issued a trading update alongside its AGM statement today

What Persimmon said

Demand for new homes continues to outstrip supply.
The Group expects to deliver volume growth in the range of 4-7% this year
Sales will be weighted towards the second half

Twindig take

Persimmon was singing off the same hymn sheet that Taylor Wimpey used yesterday. The pandemic, rising living costs and rising interest rates have not dampened our appetite for new homes. Demand is greater than supply and therefore house prices continue to rise.

Persimmon's current forward sales position at £2.8bn is slightly below its level from a year ago (£3.0bn), but the Group is currently operating from fewer active outlets. Sales rates however are around 2% higher than one year ago and with plenty of new site openings to come, Persimmon expects to deliver more homes (4-7% more) this year than last year.

Persimmon has been working hard on build quality and customer satisfaction and for the first time in its history has been awarded a five-star rating in the Home Builder Federation's annual customer satisfaction survey. Earlier this month Persimmon also signed the Government's pledge on cladding removal and fire safety remediation, further evidence that the customer is just as much a king to Persimmon as cash is.

Shareholders also have news to celebrate as Persimmon will be returning 235p per share to shareholders during 2022 with the first 125p already received on 1 April.

In summary, the trading update is positive and the outlook for Persimmon looks robust

FY2021 Results review

If Persimmon's results are a proxy for the overall UK housing market, then the housing market is in good health. Persimmon sold 1,000 more homes, for a higher price and generated higher operating margins and profits. It also increased its landbank, putting a marker in the ground that the outlook for the housing market is good, very good.

It won't be all plain sailing, build costs and interest rates are rising, help to buy is coming to an end and the bill for cladding remediation works is unknown, but it appears to us that Persimmon's foundations and those of the UK housing market are strong.

FY2021 trading update review

Like the housing market it supplies, Persimmon had a good year in 2021. The number of homes it sold and the prices it sold them for increased.

Trading update highlights

New home completions 14,551 up 7% on 2020 (13,575)
Average selling price £237,050 up 3% on 2020 (230,534)
Group revenues £3.61bn up 8% on 2020 (£3.33bn)
Group operating margin c.28% (2020: 27.6%)
Cash at 31 December 2021 £1.25bn (2020: £1.23bn)
Forward Order book £1.62bn
down 4% on 2020, but up 19% on 2019
Outlook: long term robust, near term pandemic related uncertainty remains

Twindig take

Like the housing market it supplies, Persimmon had a good year in 2021. The number of homes it sold and the prices it sold them for increased. As a result, profits are rising. Persimmon has been criticised in the past for putting profits ahead of people. However, customer satisfaction like Persimmons' profits are also increasing and since October last year, 92% of customers would recommend Persimmon to a friend.

Persimmon is also doing the right thing by customers caught up in the cladding issue, last year it made a commitment that leaseholders in buildings it had constructed, including all those above 11 metres, should not have to cover the cost of cladding removal.

The strength of the forward order book suggests that 2022 will be another good year for Persimmon, its customers and its shareholders.

Housing Hailey

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