Housebuilder Persimmon saw underlying operating profits slump by almost two-thirds as it warned the market is likely to remain subdued throughout this year.
The York-based business said the near-term outlook remained uncertain as interest rates were expected to hold and with a General Election in the offing. It said that while affordability had improved somewhat, it remained constrained, particularly for first time buyers, as trading in southern and eastern counties remained challenging with weaker pricing that was offset by stronger trading across the North.
The number of new homes completed by Persimmon during 2023 fell substantially to 9,922, from 14,868 the year before. Group revenue dropped from £3.82bn to £2.77bn as the average new home selling price increased to £255,752 from £248,616.
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Persimmon now expects to deliver between 10,000 and 10,500 new homes this year, at margins in line with 2023 and with build cost inflation expected to be between 3-5%. It hopes to grow its number of open sites to more than 300 in the medium term, from 266 last year.
Dean Finch, group chief executive, said the business was able to manage uncertainty and that there would be a return to growth over the medium-term. He said: “The group successfully navigated the challenging market conditions in 2023. Completions were ahead of expectations, margins were industry-leading, we maintained our strong balance sheet and we continued to deliver further improvements in our product quality and service.
“Although the near-term outlook remains uncertain, the significant pent-up demand for homes remains unchanged. Customers want quality homes in the places where they want to live and work, and affordability is crucial. During the year we have continued to take further steps to strengthen the business and we are well placed to meet this demand through our three excellent brands offering different price ranges with overall private average selling prices that are below the market average. The investments and operational changes that we have made in the past few years mean that we are trusted by our customers to deliver consistently high-quality homes.
“We can achieve this while positioning the business to maintain industry-leading financial returns as markets recover, supported by our vertically integrated business model, strategic land buying and disciplined approach to cost control. Through further investments in innovation, I believe we can build even higher quality homes better, faster and more efficiently over time.”
Original artice – https://business-live.co.uk/all-about/yorkshire-humber