Investing.com — Stocks Persimmon (LON: ) jumped over 5% on Tuesday after it reported a 7% increase in home completions for 2024, beating market expectations.
The UK-based housebuilder delivered a total of 10,664 homes, beating consensus of 10,511 and guidance of around 10,500, with the private homes sector showing particularly strong growth.
“This is consistent with what we are seeing on the ground that the housing market is performing better than stock prices suggest so far this year,” RBC Capital Markets analysts said in a note.
Completed private houses increased by 18%, amounting to 9,075 houses, while partnership houses recorded a decline, falling to 1,589 from 2,241 in 2023.
The increase in completions was driven by a combination of higher demand and strategic investment.
The company’s average private sale price rose slightly to approximately £287,150, compared to £285,774 the previous year.
This price growth is supported by an improving market environment and a favorable mix of homes sold.
On the other hand, partner houses saw a more significant price increase of 6%, bringing the ASP to £161,900.
As a result, the combined ASP for all homes was £268,500, an increase of 5% on the previous year.
Persimmon’s strong performance extended to its sales rates, with net private sales per outlet weekly up 21% to 0.70, compared to 0.58 in 2023.
The company also increased the number of outlets it operated, opening approximately 100 new outlets during the year, bringing the total number of outlets to 270 by December, up 5% from 2023.
In terms of financial results, the company expects full-year underlying profit before tax to fall at the higher end of market expectations, within a range of £349m to £390m.
The company’s forward sales increased by 8% to £1.15 billion, driven by a 31% jump in private forward sales. Private forward ASP was also higher, at around £276,850, reflecting an increase of 4% year-on-year.
Persimmon’s balance sheet remained strong, with net cash of £260m at the end of the year, although this marked a decline from the £420m at the end of 2023.
The company attributed the drop in cash to its current investments, including £60m spent on building safety repairs, bringing the total to £120m.
These efforts are part of Persimmon’s commitment to ensuring development safety, with remediation work completed or underway at more than 70% of known affected sites.
Going forward, Persimmon remains cautious about potential challenges brought by macroeconomic and geopolitical uncertainties, including changes in interest rates. Despite these concerns, the company is confident in its ability to manage costs, due to its land investments and vertical integration model.
With an improved order book and a strong land bank, Persimmon is poised to continue its growth in 2025, aiming to expand its sales base to more than 300 locations in the medium term.
“Longer-term – Persimmon is trading at a 22% premium to the sector, and we continue to expect it to underperform its peers in the coming year,” RBC added.
