Profits drop at house builder amidst housing market slowdown
York-headquartered residential developer, Persimmon, says it expects to deliver at least 9,000 house completions for the full year the top end of its previously indicated range.
But it has also seen its pre-tax profits fall to £151m (H1 2022: £439.7m) in its half year results for the six months ended 30 June 2023. Total group revenue for the period was £1.19bn (H1 2022: £1.69bn).
Persimmon recorded 4,249 new home completions in H1 (2022: 6,652), which it says reflects the lower forward order book coming into the year following the market challenges after the Government’s turbulent mini-Budget last autumn.
Dean Finch, group chief executive, said: “Against a backdrop of higher mortgage rates, the removal of Help to Buy and significant market uncertainty, Persimmon has delivered a robust sales rate excluding bulk sales whilst growing the private average selling price in our forward order book and also securing cost savings.
“We are on track to deliver profit expectations for the year and are building a platform for future growth.
“Our private sales rate has remained broadly consistent throughout the period resulting in a private forward order book that is now 83% higher than it was at the beginning of the year.
“Our pricing overall has remained resilient with continued positive momentum in the forward order book. However, the reduced volumes in the first half of the year has negatively affected our operating margins as we predicted earlier in the year.”
The group says additional cost control measures have been put in place, with stronger central oversight of spend within its regional businesses.
A recruitment freeze across the group has seen headcount reduce by nearly 300 in the period. Further reviews are ongoing and Persimmon says it is targeting £25m annualised saving, which will benefit its 2024 operating budget.
