Persimmon homes sees tough year ahead
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Persimmon homes pre tax profits fall by over 50% after interest rate rises subdue housing sales, home builders look forward to another tough year.
Dean Finch Group chief executive commented saying that: “With interest rates expected to remain at current levels and a general election on the horizon, market conditions are expected to remain subdued throughout 2024.
“However, we are well placed to manage this and are positioning the business for sustainable future growth over the medium-term.”
Pre re-tax profits fell to £351.8m from £730.7m last time on turnover down to £2.77bn from £3.82bn for the year end December 31 2023.
Persimmon said its “disciplined approach” to cost control during the year included a hiring freeze and shutting the South Yorkshire office which resulted in a 13% drop in staff numbers and a £23m annual saving.
Finch continued to say that: “We actively renegotiated subcontractor pricing in the year, resulting in a softening of build cost inflation in the second half, which will benefit completions from 2024.Persimmon said that it would begin to borrow money to increase build rates when the market starts to pick up.”
A spokesman for the company elaborated saying: “As we look to expand our outlet base and invest in work in progress in anticipation of a housing market upturn, we expect to utilise our new £700m Revolving Credit Facility during 2024.
“Consequently, we anticipate transitioning from an average net cash to an average net debt position through 2024, resulting in an estimated net finance charge of approximately £15m-£20m for the 2024 financial year. We currently anticipate our net cash to be between zero and £200m as of 31 December 2024.”
