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Persimmon PLC on Wednesday warned of a tough year as it halved its annual dividend and warned of UK house prices declining. The York-based housebuilder said annual revenue rose 5.7% to £3.82 billion in 2022 from £3.61 billion in 2021. Pretax profit fell 24% to £730.7 million from £966.8 million, however. Persimmon shares fell 9.3% to 1,317.10 pence each in London on Wednesday morning, the worst FTSE 100 performer. The profit contraction reflects a £275.0 million increase in Persimmon’s provision for building safety remediation, which relates to flammable cladding. The average selling price in 2022 increased 4.9% to £248,616, as new home completions rose 2.2% to 14,868. Mortgage lender Nationwide on Wednesday reported that UK house prices fell 1.1% annually in February, compared to a 1.1% rise in January. On a monthly basis, prices fell 0.5% in February from January, slowing slightly from a 0.6% decline in January from December. It was the sixth consecutive monthly decline in UK house prices, however. The average price for a house in the UK was £257,406, down from £258,297 in January. House prices in February were 3.7% below their August peak. Persimmon proposed a 60 pence final dividend, which will be the only payout for 2022 and less than half of 125p paid in total for 2021. Chair Roger Devlin said: ‘2023 promises to be a tough year, albeit largely for reasons beyond our control.’ Looking ahead, Persimmon said its current outlet network would imply 8,000 to 9,000 legal completions in 2023, but it is too early for any certainty. Margins could be hit by around 500 basis points by lower average selling prices and cost inflation, with another 800 basis point hit from reduced volumes and increased sales incentives and marketing costs. Chair Devlin said: ‘We will inevitably see a sharp fall in the number of completions as well as a decline in profitability as a consequence of the nationwide diminution in demand for housing arising from higher mortgage rates and challenging economic circumstances.’ Devlin added that he remains ‘very confident’ in the long-term prospects for the company, citing a national need for 300,000 homes to be built every year, according to ’political classes‘. Copyright 2023 Alliance News Ltd. All Rights Reserved.
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