ii view: Persimmon grows sales in tough marketplace

Third-quarter trading up to 3 November

• Net private sales per outlet per week up 9% to 0.76
• Forward sales up 15% to £2.79 billion
• Average selling price of £295,150, up from £291,514 a year ago

Guidance:

• Expects year-end net cash of up to £200 million
• Continues to expect adjusted pre-tax profits of around £429 million, potentially up from 2024’s £395 million 

Chief executive Dean Finch said:

"Persimmon has performed well during 2025, in a challenging market, with increased sales rates, more sales outlets, and robust pricing. This demonstrates the benefit of the investment made in the business in recent years. 

"While we are mindful of the current macroeconomic environment and the short-term challenges facing our industry, we are confident in the underlying strength of the market over the medium term."

• Our Services: SIPP Account | Stocks & Shares ISA | See all Investment Accounts

ii round-up:

Housebuilder Persimmon (LSE:PSN) today detailed progress against a backdrop of challenging market conditions.

Aided by geographical diversity and affordability initiatives, net private sales per outlet per week for the third quarter to early November rose 9% from year ago 0.76. Total forward sales climbed 15% to £2.79 billion. Management continues to expect full-year build completions of around 11,293 with adjusted pre-tax profits of £429 million. That’s potentially up from last year’s 10,664 and £395 million. 

Shares in the FTSE 100 company rose by 2% in UK trading having come into this latest news up around 4% so far in 2025. The FTSE 100 index is up by a fifth year-to-date, while high dividend paying rival Taylor Wimpey (LSE:TW.) is down by around 16%. 

Persimmon operates via 29 UK regional offices, selling homes under the brand names Charles Church, Westbury Partnerships and Persimmon itself.

Average selling prices remained robust at £295,150 and compared to £291,514 a year ago, with investment in land year-to-date totalling £336 million compared to £318 million this time last year. 

Management expects net cash of up to £200 million come the year end. Broker Morgan Stanley reiterated its ‘overweight’ stance on the shares post the update. 

A full-year trading update is scheduled for 13 January. 

ii view:

Founded in 1972 and headquartered in York, Persimmon today employs over 4,500 people. As well as regional offices across the UK, the housebuilder also operates three manufacturing plants where it makes items ranging from timber frames and roof systems to bricks and tiles. Group competitors include Barratt Redrow (LSE:BTRW), Taylor Wimpey and Bellway (LSE:BWY). 

For investors and potential homebuyers alike, there are now concerns regarding possible tax increases at the upcoming UK Budget and rising unemployment. Work in relation to fire safety remediation continues. Cost pressures such as previously increased employer National Insurance contributions are now being battled, while a forecast one-year price/earnings (PE) ratio above the 10-year average may suggest the shares are not obviously cheap.

• Stockwatch: a FTSE 100 recovery buy or falling growth star?
• Taylor Wimpey’s woes, mixed fortunes on Wall Street
• Outlook for 2026: why more records could be broken

More favourably, customer demand remains robust if aided by ongoing selling incentives. Land purchases made over the last three years continue to support management’s medium-term ambition to increase the profit margin to 20% from 13.1% at the interim results. Expanding operations to manufacture materials such as bricks and tiles were previously estimated by management to save it around £5,500 per plot in build costs. There are also hopes that further interest rate cuts will improve demand.  

In all, and while there are clearly risks around affordability, a forecast dividend yield of around 5% and consensus analyst fair value estimate above £14.50 look to provide grounds for optimism about the long term. 

Positives

• Government push to ease planning regulations
• Previous sector consolidation

Negatives

• Uncertain economic outlook
• Reducing net cash held

The average rating of stock market analysts:

Buy