Persimmon plc (LON:PSN)’s first half revenue fell 8.2% to £1.69bn, driven by lower completions as delays in planning consent hold back new outlet openings.
Underlying operating profit fell 8.8% to £440.7m. Higher house prices offset build cost inflation but a relative increase in operating costs, partly due to lower completions, pushed operating margin lower.
Q2 2022 hedge fund letters, conferences and more
The group continues to target around 10% growth in outlets and 14,500-15,000 completions for the full year.
The shares were broadly flat following the announcement.
Persimmon's Earnings
Matt Britzman, Equity Analyst at Hargreaves Lansdown
“Higher prices continue to offset an 8-10% rise in build costs, as Persimmon sees robust demand and low levels of cancellations. Revenue and profits have fallen, but that was expected given lower completions this year as strong demand over the last couple of years and a slowdown in spending in 2019/20 meant active outlets were lower than they could have been. Work is being done to fix that, with another 70 outlets planned to open in the second half and cash being funnelled into buying new land and bringing sites online – though planning permission continues to be a bugbear for the entire industry.
Persimmon has an ace up its sleeve when it comes to combatting supply chain and build cost pressure. The in-house brick, tile and timber factories are ramping up production to improve supply resilience and should help the group achieve its full year target of 14,500-15,000 completions. However, the ramp up over the second half needs to pan out of that’s going to be achievable.”
About Hargreaves Lansdown
Over 1.7 million clients trust us with £132.3 billion (as at 30 April 2022), making us the UK’s number one platform for private investors. More than 98% of client activity is done through our digital channels and over 600,000 access our mobile app each month.
