Profits slump at housebuilder as it braces for another difficult year

York-headquartered housebuilder, Persimmon, saw new home completions, revenues and pre-tax profits fall steeply during a difficult year, as it publishes its final results for the year ended 31 December 2023.

Completions dropped from 14,868 in 2022 to 9,922, while the group reported total revenues of £2.77bn (2022: £3.82bn) and pre-tax profits of £351.8m (2022: £730.7m).

The business says its customer confidence was impacted by more limited mortgage availability following the Government’s autumn 2022 “mini” budget and stretched affordability.

It points out that at the end of 2023, the average two-year mortgage fix was 5.9%, significantly higher than the 2.4% average two years earlier, which was further compounded by the removal of Help-to-Buy in October 2022.

However, Dean Finch, group chief executive, said Persimmon had still managed to successfully navigate tough market conditions and is now well placed for a medium-term return to growth.

He added: “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.

“We are well placed to manage the ongoing uncertainty and we have good visibility over our land pipeline which, over the medium-term, will support a return to growth in outlets and volumes, alongside improved margins and robust cash generation, paving the way for sustainable shareholder returns.”

With interest rates expected to remain at current levels and a General Election on the horizon, Persimmon notes market conditions are expected to remain “subdued” throughout 2024.

Overall, the group expects to deliver between 10,000 and 10,500 new home completions for this year.

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