Shares in FTSE 100-listed Persimmon dropped on Wednesday despite announcing a first-half uptick in sales and profits.
At £11.04 per share, the housebuilder was last dealing 2.7% lower in the midweek session.
Persimmon said housing revenues popped 12% higher in the first half of the year, to £1.31 billion. Total completions rose 4% to 4,605 homes, while average selling prices increased 8% to £284,047.
Private completions rose 3,987 over the six months. The firm said it remains on track to achieve total completions of 11,000-11,500 properties over the full year, and 12,000 in 2026.
Persimmon described its performance as “particularly pleasing given the challenging market environment that we are operating in.”
It said interest rate cuts, looser lending rules and real term pay rises helped improve buyer affordability during the first half.
However, it added that “this has been balanced with the impact of council tax, national insurance, stamp duty and energy bill increases in April, alongside macroeconomic uncertainty weighing on consumer sentiment.”
On a statutory basis, revenues rose 12% year on year to £1.5 billion.
The builder’s private sales rate (excluding bulk sales) rose to 0.62 from 0.59 in the first half of 2024.
Profits Up, Cash Down
Underlying operating profit improved 13% to £172 million, which Persimmon said was “driven by increased volume and on-going operational discipline.” Pre-tax profit was essentially flat year on year at £146.7 million.
Underlying operating margin rose 10 basis points over the year to 13.1%. The company said it remains on course to achieve a full-year margin of 14.2%-14.5%.
Net cash slumped by £227.2 million in the first half to £123 million. The interim dividend was frozen at 20p per share.
Strong Delivery
Chief executive Dean Finch said “I am pleased that we have continued to grow in the first half of the year despite challenging market conditions and with affordability still an important constraint.”
He added that “our average sales price, sales, completions, planning approvals, active sites and forward order book are all up, many against industry trends, showing that our strategy including a focus on self-help has continued to deliver.”
Persimmon said net private sales (excluding bulk transactions) in the five weeks since the end of June was 0.61. That’s up from 0.55 in the same 2024 period.
Its private forward order book, meanwhile, is up 11% year on year at £1.25 billion, with an average sales price of £292,800, up 1.3% year on year. Including partnerships, the order book is 9% higher at £1.86 billion.
The company said “we are now [approximately] 80% secured on private completions and fully secured on Partnerships completions for the full year, positioning us well as we enter the second half of the year.”
“Steady progress”
Analyst Andy Murphy of Edison said that Persimmon’s half-year update “show a business delivering steady progress despite a housing market facing affordability pressures and macroeconomic uncertainty.”
He noted that “vertical integration, increased in-house production, and targeted incentives are helping to protect margins,” adding that “the group’s ability to sustain outlet growth, secure forward sales and improve operational efficiency positions it well for margin progression into 2026, though the pace will depend on easing cost pressures and a stable housing market.”
Royston Wild owns shares in Persimmon.