"The market remains uncertain. Our marketing campaign has helped improve the group's sales rates in the new year from the lows at the end of 2022 but they still remain lower year on year"
In its report for the year ending December 31 2022, the business said this level of reduction was likely to occur if current sales rates were to continue for the rest of this year.
During the first eight weeks of 2023, private sales rates were 0.52 per outlet per week, an improvement on the 0.19 seen in the last seven weeks of 2022. But they were still “significantly below” the 0.96 during the equivalent period last year. Persimmon said lower completions would impact its margin, with a possible reduction of around 500bps if cost inflation were to persist at around 8% with no tempering from an increase in its homes’ average selling price.
It added that operating margins could be further impacted by around 800bps by the reduced volumes, increased sales incentives and marketing costs. The company said it would be harder to mitigate the margin effect of lower volumes as it had reduced its costs while wishing to retain the capacity “to grow again in the near term”.
Dean Finch, Persimmon’s group CEO, said: “Persimmon delivered a very strong performance in 2022. I am particularly pleased we combined strong financial results with five-star customer service and quality.
“The market remains uncertain. Our marketing campaign has helped improve the group's sales rates in the new year from the lows at the end of 2022 but they still remain lower year on year.
"Looking further ahead, the fundamentals underpinning demand for new homes remain strong and we continue to target disciplined growth in the coming years while continuing to enhance our quality and service credentials.”
