12th Mar 2024 10:28
(Alliance News) - Shares in Persimmon PLC fell on Monday as analysts suggested earnings forecasts would be adjusted downwards following slightly weaker than expected guidance.
Shares in Persimmon slipped 3.2% to 1,330.50 pence each in London on Tuesday. It was the worst performing stock in the FTSE 100.
The York, England-based housebuilder said in 2023 pretax profit slumped to GBP351.8 million from GBP730.7 million in 2022, hit by lower volumes and build cost inflation. Diluted earnings per share tumbled to 79.5 pence from 174.3p.
Total revenue decreased 27% to GBP2.77 billion from GBP3.82 billion.
Persimmon said new home completions totalled 9,922, down one third from 14,868 last year, ahead of initial guidance with strong delivery in the fourth quarter.
The annual dividend was unchanged at 60p per share.
Chief Executive Dean Finch said although the near-term outlook "remains uncertain, the significant pent-up demand for homes remains unchanged".
"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," Finch continued.
Persimmon said it expects market conditions to remain subdued throughout 2024. It expects to deliver between 10,000 and 10,500 completions for 2024, of which it has full planning on 98%, with a housing operating margin in line with 2023.
Build cost inflation is expected to be around 3% to 5% in 2024, with spot inflation currently running at around 1%, Persimmon said.
In 2024, Persimmon expects to use its GBP700 million revolving credit facility and to move from an average net cash position to an average net debt position. This reflects investment in work in progress in anticipation of a housing market upturn.
Persimmon estimates net finance charges of around GBP15 million to GBP20 million in 2024.
Analysts at UBS noted guidance for 2024 was slightly softer than expected.
UBS said Persimmon forecast flat operating margins of 14.0% compared to the market consensus of 14.8%, and a finance cost of GBP15 million to GBP20 million, well above the consensus expectation of GBP3 million.
UBS estimated this implies a range of GBP345 million to GBP385 million for pretax profit, slightly below consensus of GBP381 million.
The broker also highlighted that Persimmon said sales per site per week in 2024 stood at 0.59 in the first ten weeks of the year, slightly softer than Taylor Wimpey which reported a figure of 0.67.
Analysts at Davy Research agreed, predicting a modest low-single-digit percentage downgrade to earnings per share forecasts.
By Jeremy Cutler, Alliance News reporter
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