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Persimmon announces its half year results for the six months ended 30 June 2022.
Posted: August 17th, 2022, 7:19 am
by idpickering
Strong demand - average private sales rate for the period c.1% ahead year on year, with robust forward sales
position and re-iterate guidance of 14,500 -15,000 legal completions this year;
6,652 new home completions (2021: 7,406) as Group rebuilds its outlet position;
Robust financial performance delivering industry-leading margins and ROCE;
Strong customer service, build quality and efficiency;
On track to achieve c.10% increase in active outlets by the end of the current year with 60 outlets opened in the
period;
8,829 plots brought into the business across 37 locations – a replacement rate of over 130%;
Returned £750m to shareholders by July 2022.
And later;
On 1 April 2022 125p per share (or £399.0m) of surplus capital was returned to shareholders as an interim cash
dividend in respect of the financial year 31 December 2021.
On 8 July 2022 110p per share (or £351.1m) of surplus capital was returned to shareholders as an interim cash
dividend in respect of the financial year 31 December 2021.
In total, 235p per share of surplus capital has been returned to shareholders during 2022 in respect of the financial
year 31 December 2021. There will be no further distributions to shareholders in relation to the financial year 31
December 2021.
https://www.persimmonhomes.com/corporat ... t-2022.pdfAlso posted on Company News here;
viewtopic.php?p=523003#p523003Persimmon are my house builder of choice which I hold in my HYP. I've bought the share five times this year.
Ian.
Re: Persimmon announces its half year results for the six months ended 30 June 2022.
Posted: August 17th, 2022, 4:17 pm
by Itsallaguess
Looks like today's results haven't gone down well at all in the market, with Persimmon topping the FTSE100 'Fallers' leaderboard.
The share price is currently down about 8% on the day, and down a whopping 41% since the start of the year.
Reading the results, there's a feeling that they need house-prices to continue to rise to offset a number of cost-inflations being seen by the industry, and perhaps the market isn't expecting their current ability to play those two off against each other to last too much longer...
Cheers,
Itsallaguess
Re: Persimmon announces its half year results for the six months ended 30 June 2022.
Posted: August 17th, 2022, 4:23 pm
by scrumpyjack
Itsallaguess wrote:Looks like today's results haven't gone down well at all in the market, with Persimmon topping the FTSE100 'Fallers' leaderboard.
The share price is currently down about 8% on the day, and a whopping 41% since the start of the year.
Reading the results, there's a feeling that they need house-prices to continue to rise to offset a number of cost-inflations being seen by the industry, and perhaps the market isn't expecting their current ability to play those two off against each other to last too much longer...
Cheers,
Itsallaguess
With profit margins at over 30% there is scope for quite a bit of unrecovered cost inflation before profits are seriously affected, to the level the current share price seems to expect. I do think though that the current dividend of 235p will not carry on. It is described as a 'capital return plan' rather than a normal dividend which the directors intend to maintain/increase long term.
Re: Persimmon announces its half year results for the six months ended 30 June 2022.
Posted: August 17th, 2022, 4:32 pm
by Itsallaguess
scrumpyjack wrote:
With profit margins at over 30% there is scope for quite a bit of unrecovered cost inflation before profits are seriously affected, to the level the current share price seems to expect.
I do think though that the current dividend of 235p will not carry on. It is described as a 'capital return plan' rather than a normal dividend which the directors intend to maintain/increase long term.
There's going to be a hell of a lot of diverse inflationary headwinds in housebuilding, and that's before the '
working from home' planning departments get a chance to slow things down to a snails-pace -
Persimmon has reported a 10% drop in completions for the first half of the year as ‘planning complexity’ slowed the opening of new sites.
The housebuilding giant, in a trading update for the six months to 30 June, reported 6,652 completions, down on the 7,406 recorded in the same period last year and fewer than the 7,584 posted in 2019 pre-pandemic.
Persimmon also reported an 8% fall in turnover to £1.69bn and an 8.4% drop in pre-tax profit to £439.7m, but said completions would pick up in the second half of the year.
The firm opened 60 new outlets – sites where homes are ready to sell – in the first half of the year, missing its original target of 75.
It said: “Delays and increasing complexity in the planning system are impacting our ability to open new outlets as promptly as we would like.”https://www.housingtoday.co.uk/news/persimmon-reports-drop-in-completions-amid-planning-complexity/5118820.articleSurely the market's seen this coming though, as shown on the share-price chart below since the beginning of the year -
Source - https://www.google.com/finance/quote/PSN:LON?window=YTDCheers,
Itsallaguess
Re: Persimmon announces its half year results for the six months ended 30 June 2022.
Posted: August 17th, 2022, 4:45 pm
by idpickering
My thanks to the guys above for their posts/input. I think all their points are valid, but the fall in Persimmon's sp today won't change my stance in continuing to hold the stock. tbh though, should the dividend be slashed in the future I may well reconsider my position. Either way, no knee-jerk reactions from me re: my PSN holdings. I'm thinking longer term than just today.
Ian.
Re: Persimmon announces its half year results for the six months ended 30 June 2022.
Posted: August 17th, 2022, 5:42 pm
by kempiejon
Persimmon hasn't really looked like a HYP share to me since 2006ish. Erratic pay-outs described as returns of capital cessations of payments in 2009/10, 2012/13.
Perhaps I'm a little narrow in my selection and I can see PSN as an income pick just not really HYPable.
Re: Persimmon announces its half year results for the six months ended 30 June 2022.
Posted: August 17th, 2022, 6:15 pm
by Itsallaguess
kempiejon wrote:
Persimmon hasn't really looked like a HYP share to me since 2006ish.
Erratic pay-outs described as returns of capital cessations of payments in 2009/10, 2012/13.
Perhaps I'm a little narrow in my selection and I can see PSN as an income pick just not really HYPable.
It's an interesting exercise to align both the Persimmon yield history and dividend history from between 2000 to 2022 -
Source - https://www.dividenddata.co.uk/dividend-history.py?epic=PSN'
Erratic' does indeed seem to be an apt description kempiejon...
Cheers,
Itsallaguess
Re: Persimmon announces its half year results for the six months ended 30 June 2022.
Posted: August 18th, 2022, 6:51 am
by Arborbridge
Oh dear, and I topped up in May
Could be another of those disaster shares - overall I am on a breakeven score. But then, I was with Carillion and Interserve for a while.
Arb.
Re: Persimmon announces its half year results for the six months ended 30 June 2022.
Posted: August 18th, 2022, 8:12 am
by idpickering
Arborbridge wrote:Oh dear, and I topped up in May
Could be another of those disaster shares - overall I am on a breakeven score. But then, I was with Carillion and Interserve for a while.
Arb.
I feel your pain Arb, and thanks for your input.
I’m beginning to think I’ve fallen for the ‘don’t chase high yields trap’ as advised by Dod a number of times. Hmm….
Fwiw, Persimmon are up 1.5% as I type. I’m holding firm with them, but that might change going forward? The bottom line though is that I knew it was a cyclical stock when I bought it, and I did so for the dividend. I should remember that.
Ian.
Re: Persimmon announces its half year results for the six months ended 30 June 2022.
Posted: August 18th, 2022, 8:20 am
by scrumpyjack
Arborbridge wrote:Oh dear, and I topped up in May
Could be another of those disaster shares - overall I am on a breakeven score. But then, I was with Carillion and Interserve for a while.
Arb.
They are out of favour in the market at the moment because of fears for falling house prices and higher interest rates, but they have a very strong balance sheet so it is nothing like those basket cases you mention. There is sustained and increasing demand for their product, and limited supply partly due to planning departments. If there is a sustained large fall in house prices, they will get through it and eventually prosper as the replacement cost of their land falls. But given that HMG knows that governments that preside over a big fall in house prices in the 2 years before an election lose that election, HMG will do all it can to prevent that fall occurring. I will certainly continue to hold BDEV and PSN.
Re: Persimmon announces its half year results for the six months ended 30 June 2022.
Posted: August 18th, 2022, 8:29 am
by Arborbridge
scrumpyjack wrote:Arborbridge wrote:Oh dear, and I topped up in May
Could be another of those disaster shares - overall I am on a breakeven score. But then, I was with Carillion and Interserve for a while.
Arb.
They are out of favour in the market at the moment because of fears for falling house prices and higher interest rates, but they have a very strong balance sheet so it is nothing like those basket cases you mention. There is sustained and increasing demand for their product, and limited supply partly due to planning departments. If there is a sustained large fall in house prices, they will get through it and eventually prosper as the replacement cost of their land falls. But given that HMG knows that governments that preside over a big fall in house prices in the 2 years before an election lose that election, HMG will do all it can to prevent that fall occurring. I will certainly continue to hold BDEV and PSN.
Thanks for that POV. I don't see demand for housing dropping in my lifetime and rationally that should mean steady prices and a good outlook. As HYPers we should be able to look through this medium term difficulty - for undoubtedly it will be. PSN being one of the biggest (THE biggest) builder should be well placed: but the cynic might point out I thought that about TESCO too.
I was very late to the PSN party, being deterred by the way the dividends were paid - it is not a typical HYP company - but I eventually jumped on the band wagon in 2018. I guess I will hang on through the bad times.
Arb.
Re: Persimmon announces its half year results for the six months ended 30 June 2022.
Posted: August 18th, 2022, 8:41 am
by AsleepInYorkshire
The usual caveat if I may please. If I've got the wrong board or spoken out of place it isn't because I haven't thought about it. Just I've made a poor judgement call after that thought process.
May I suggest that there is an issue with Persimmon. It's book value is well above 1. It's 1.75. This would suggest purchasing their shares now means you are purchasing their future [potential] margins on land they own now. If they don't achieve those margins the value of the stock will fall and possibly the dividend with it. House builders are facing stronger headwinds.
AiY(D)
Re: Persimmon announces its half year results for the six months ended 30 June 2022.
Posted: August 18th, 2022, 9:07 am
by monabri
AsleepInYorkshire wrote:The usual caveat if I may please. If I've got the wrong board or spoken out of place it isn't because I haven't thought about it. Just I've made a poor judgement call after that thought process.
May I suggest that there is an issue with Persimmon. It's book value is well above 1. It's 1.75. This would suggest purchasing their shares now means you are purchasing their future [potential] margins on land they own now. If they don't achieve those margins the value of the stock will fall and possibly the dividend with it. House builders are facing stronger headwinds.
AiY(D)
No, definitely not out of place, the logic of your argument leads to whether a dividend can be supported or even will grow ....something that all HYP holders would like.
Headwinds being labour shortages, material cost increases, mortgage rate increases reducing affordability, cost of living increases in general tempering demand due to a reduced affordability. Further increase in mortgage rates are likely. How much of this is baked in to the current share price?
There was a big difference between housebuilders and Carillion. The former have been selling stuff at attractive margins whereas Carillion was a no/low margin "job creation scheme".
Re: Persimmon announces its half year results for the six months ended 30 June 2022.
Posted: August 18th, 2022, 9:14 am
by moorfield
Persimmon's "too high"(*) yield has put me off buying it for years.
(*) An unpopular notion here I know, but it works for me. Persimmon's yield is to good to be true, and that will out sooner or later.
Re: Persimmon announces its half year results for the six months ended 30 June 2022.
Posted: August 18th, 2022, 9:34 am
by scrumpyjack
moorfield wrote:Persimmon's "too high"(*) yield has put me off buying it for years.
(*) An unpopular notion here I know, but it works for me. Persimmon's yield is to good to be true, and that will out sooner or later.
I have frequently pointed out it isn't a normal dividend and they have said again, and again, and again, it is a 'Capital Return Plan' with a specific start date and a specific end date (the last payment on their schedule has already been made). It was hiked up to the current huge level to distract from the ludicrously high payments to directors! In spite of that it has actually been covered by earnings. I expect the dividend to return to a more normal level, perhaps 125p, and for them to declare that the capital return plan has been completed.
As for the point about asset value, any trading business ought to be worth a lot more than net asset value, otherwise it isn't really worth investors holding it. The banks are an object lesson in that. If they could be wound up for net asset value that should have been done years ago!
Re: Persimmon announces its half year results for the six months ended 30 June 2022.
Posted: August 18th, 2022, 10:12 am
by moorfield
scrumpyjack wrote:I have frequently pointed out it isn't a normal dividend and they have said again, and again, and again, it is a 'Capital Return Plan' with a specific start date and a specific end date (the last payment on their schedule has already been made).
So if it has been that obvious then never really was an HYP share at all then, I suppose ? And a share price growth from £28 to £17 has done wonders for the TR protagonists here too ! Glad I've avoided.
Re: Persimmon announces its half year results for the six months ended 30 June 2022.
Posted: August 18th, 2022, 10:40 am
by IanTHughes
scrumpyjack wrote:moorfield wrote:Persimmon's "too high"(*) yield has put me off buying it for years.
(*) An unpopular notion here I know, but it works for me. Persimmon's yield is to good to be true, and that will out sooner or later.
I have frequently pointed out it isn't a normal dividend and they have said again, and again, and again, it is a 'Capital Return Plan' with a specific start date and a specific end date (the last payment on their schedule has already been made).
To me, this is the issue, and has been now for a couple of years. How much of the "dividend" has been an "Ordinary Dividend", paid out of earnings, and how much has been a "Return of Capital", cash no longer needed by the company? I must confess, I have no clue! So far, the results presented yesterday do not appear to give me a clue. I have yet to read them in detail but, based on previous results, I am not hopeful!
If I could discern that, for example, going forward the "Ordinary Dividend" portion looked sustainable and would give a yield 6.00%, I would at least be able to consider it for a HIgh Yield Portfolio (HYP). Without being able to split out the "Ordinary Dividends" from the overall "Cash Returns" that have occurred, I shall avoid.
Ian
Re: Persimmon announces its half year results for the six months ended 30 June 2022.
Posted: August 18th, 2022, 11:52 am
by AsleepInYorkshire
scrumpyjack wrote:As for the point about asset value, any trading business ought to be worth a lot more than net asset value, otherwise it isn't really worth investors holding it. The banks are an object lesson in that. If they could be wound up for net asset value that should have been done years ago!
I have an alternative view regarding house builders. I'd suggest the only tangible assets that they have is their landbank. Until that land is developed and the property sold no margin is created. (Sorry that's a really Captain Obvious comment
).
If a national home builder owns say 10,000 plots and paid £50K for each it's book value is £500m. Of course I accept they will have work in progress which carries a value. If house prices fall, as has happened in the past, the value of the land bank deteriorates. Land write downs have hurt the industry in the past. I feel book value is a good measure of downside protection if purchasing any house builder.
AiY(D)
Re: Persimmon announces its half year results for the six months ended 30 June 2022.
Posted: August 18th, 2022, 12:30 pm
by daveh
idpickering wrote:Arborbridge wrote:Oh dear, and I topped up in May
Could be another of those disaster shares - overall I am on a breakeven score. But then, I was with Carillion and Interserve for a while.
Arb.
I feel your pain Arb, and thanks for your input.
I’m beginning to think I’ve fallen for the ‘don’t chase high yields trap’ as advised by Dod a number of times. Hmm….
Fwiw, Persimmon are up 1.5% as I type. I’m holding firm with them, but that might change going forward? The bottom line though is that I knew it was a cyclical stock when I bought it, and I did so for the dividend. I should remember that.
Ian.
Yes performing really poorly, I'm now only showing a 409% gain, and they've only paid me ~2.5x the purchase price back in dividends. I don't think they are going to be your regular rising dividend type share as they have been paying their capital returns in a rather lumpy way, but they have more than delivered on the capital return plan that they announced when resuming payouts after the GFC.
Re: Persimmon announces its half year results for the six months ended 30 June 2022.
Posted: August 18th, 2022, 1:57 pm
by monabri
Arborbridge wrote:Oh dear, and I topped up in May
Could be another of those disaster shares - overall I am on a breakeven score. But then, I was with Carillion and Interserve for a while.
Arb.
You think You've got problems ....
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