ii view: housebuilder Persimmon confident about 2025

Aided by its decision to make its own building materials, and with the government keen on planning reforms. Buy, sell, or hold?

1st April 2025 11:33

Keith Bowman from interactive investor

Full-year results to 31 December

Revenue up 16% to £3.2 billion
Adjusted pre-tax profit up 10% to £395.1 million
Net cash of £258.6 million, down from £420.1 million
Final dividend of 40p per share
Total 2024 dividend of 60p per share, unchanged from 2023

Guidance:

Targeting 2025 build completions of 11,000 and 11,500, up from 10,664 in 2024
Targeting a medium-term operating margin of 20%, up from 14.1% during 2024

Chief executive Dean Finch said:

"Persimmon's disciplined investment and significant operational improvements in recent years has created a stronger business. This is demonstrated by our growth in 2024, with completions, outlets and profit all up. The underlying market fundamentals remain strong and we are encouraged by the further improvement in our sales rates in the early weeks of this year.

“With our strong platform in place, we are targeting further growth this year and are confident the business will grow margins, returns and shareholder value over the medium term."

Invest with ii: What is a Managed ISA? | Open a Managed ISA | Transfer an ISA

ii round-up:

Persimmon (LSE:PSN) operates from 29 UK regional offices and three offsite manufacturing facilities where it makes items ranging from timber frames and roof systems to bricks and tiles.

Its brand names are Persimmon Homes, Charles Church and Westbury Partnerships. Employing just around 4,700 people, it completed 10,664 new homes in 2024, up from 9,922 in 2023.

For a round-up of these latest results announced on 11 March, please click here.

ii view:

Founded in 1972 and headquartered in York, Persimmon is today the UK’s third-largest housebuilder by stock market value, behind rivals Barratt Redrow (LSE:BTRW) and Taylor Wimpey (LSE:TW.). A constituent of the FTSE 100 index, it achieved an average selling price of £268,499 in 2024, up 5% from 2023. The group builds and sells home across the UK from Scotland to Southern West Wales and down to Devon and Cornwall.

For investors, cost pressures such as increased employer national insurance contributions and a potential Building Safety Levy could squeeze profit margins. A possible global trade war could hinder UK economic health, raising unemployment and reducing customer demand. A forecast one-year price/earnings (PE) ratio above the three- and 10-year averages may suggest the shares are not obviously cheap, while customer affordability constraints persist, with mortgage rates near their highest in years.

More favourably, Persimmon’s own making of building materials such as bricks should help it deal with any broader increases in material prices. Land purchases made over the last three years support management’s medium-term ambition to boost profit margins to 20% from 14.1% currently. Government assistance is on the way as it eases planning regulations, while potentially lower UK interest and mortgage rates could boost customer demand.

For now, and while risks remain, a forecast dividend yield of around 5% and consensus analyst estimate of fair value above £15 per share are likely to keep investors interested.

Positives

Government push to ease planning regulations
Previous sector consolidation

Negatives

Uncertain economic outlook
Reduced net cash held

The average rating of stock market analysts:

Buy

These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

Get more news and expert articles direct to your inbox