Persimmon sees 2023 volumes towards top end of guidance

Persimmon posted a slump in first-quarter completions on Wednesday but said it expects full-year 2023 volumes to be towards the top end of guidance following an improvement in sales rates since the start of the year.

In an update for the period from 1 January to the end of March, the housebuilder said new home completions slid 42% from the same period a year earlier to 1,136. Meanwhile, net private sales per outlet declined 37% to 0.62, although this was higher than 0.30 in the final quarter of last year.

Chief executive Dean Finch said: "Our performance in the first quarter was as we expected and reflects the challenging trading conditions in Q4 2022 and consequent lower forward order book as we entered the year.

"Trading over recent weeks has offered some signs of encouragement with visitor numbers up, cancellation levels normalising and sales rates continuing the steady improvement evident since the start of the year. If sales rates continue at the levels seen year to date, we would expect full year 2023 volumes to be toward the top end of the previously indicated range of 8,000 to 9,000 completions."

Persimmon said overall pricing remained firm in the first quarter, with the group’s private average selling price on completions up 10% on the same quarter a year earlier and 4% higher than the final quarter of last year.

At 0935 BST, the shares were up 5% at 1,297.50p.

Russ Mould, investment director at AJ Bell, said: "If you only looked at the headlines about a 42% drop in new home completions then you might be somewhat perplexed by the advances made by Persimmon’s share price today.

"However, the market is not going to be surprised by a slowdown which has been factored into valuations for some time and was expected by pretty much everyone.

"The reason for the relative optimism is the improved sales rate in the first quarter and the expectation that build rates will hit the top of the guidance range. Mortgage rates are such an important metric for the sector and an improvement here is helping to stoke demand.

"Challenges remain, inflationary pressures are proving sticky and Persimmon, like other housebuilders, can no longer expect soaring house prices to get it out of trouble."