Q3 2024 Persimmon PLC Trading Statement Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Aynsley Lammin - Investec - Analyst : Just two for me, please. First of all, it seems from the statement you're being a little bit more cautious on the outlook for 2025. Obviously, still expecting growth. But just trying to gauge kind of how much more cautious you are post the budget, maybe on interest rate expectations, you're flagging up some cost issues. Just seeing what's the kind of degree and seriousness of your change for looking into 2025? First question. And then secondly, just you flagged up more land opportunities. Just a bit more color around that. Is that kind of more land coming on to the market? Is the pricing easier? Is it to do with the kind of planning changes expected, easier supply side. I just wonder what's driving that and what you're seeing in the land market generally?

Question: Christopher Millington - Deutsche Bank - Analyst : Just wanted to explore a little bit about that 5% price increase you're looking in the order book. Have we been seeing you move up headline prices? Perhaps you can just talk around the mix relating to that. That's the first one I wanted to ask about. Second one, I just want to ask is where outlet numbers are now and kind of how you see them progressing? Maybe I missed them in the statement, but I didn't see any reference to the number there. And the final one I want to ask about really is just the Q4 weighting to completions. It looks like you've got probably the best part of about 43%, 44% of your units landing in the final quarter. And whilst I appreciate this is something we often see from house build, it does look quite stark at the moment. Are there any plans to address that? And maybe what would be the implications if you did so?

Question: Christopher Millington - Deutsche Bank - Analyst : I mean, would you hope to kind of address the phasing of completions in future years? Or is it going to be difficult to move it materially?

Question: Charlie Campbell - Stifel - Analyst : A couple from me, really. First one, I suppose just sort of housekeeping really. You didn't make a comment on margin in the same way that you did in August. I presume your guidance that margins are sort of the same this year as last year still stands. And the second question was you've talked about sort of first signs of cost inflation in '25. I'm guessing that there's more to that than just the points you've made on build regs and this is just sort of standard negotiations. Is that sort of more on the labor side than the material side? And I guess REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2024 / 9:00AM, PSN.L - Q3 2024 Persimmon PLC Trading Statement Call sort of maybe very early in the day to sort of call building material cost inflation for '25. But maybe if you have some ideas on that, that would be very helpful to hear.

Question: Ami Galla - Citi - Analyst : Just two for me. One was just a follow-up on build cost inflation. Can you give us some color as we kind of think about next year, how much of this build cost inflation that you're experiencing is coming from, say, historic costs in it? And how much of that increase is on the back of the 2025 negotiations that you're undergoing? And at this stage, the '25 negotiations, is that on material cost inflation that you're seeing? Or is that also labor? And the second one was on trading. In terms of trading in recent weeks, do you see any signs of urgency from first-time buyers as you kind of think about stamp duties becoming a lot more difficult for them next year?

Question: Clyde Lewis - Peel Hunt - Analyst : Dean, Andrew. A couple of questions around land, if I may. And I'd just be intrigued here whether you've had any sort of news around appeals and post the sort of change in the government, what sort of path that's been on really? And then when you've been buying the new pieces of land, have you sort of changed what you've been buying? Are you been looking for bigger sites, more sort of geographical sort of differences? And have you been changing the sort of usage of land creditors within that sort of profile? And the second sort of one question really was around sort of customers. And I suppose sort of, again, the visit patterns and I'd be interested to hear a little bit around, again, different sort of geographical patterns whether a bit like your pricing comments Dean, whether again the sort of London South East or southeast bubble is sort of quite different to the Midlands and the northern markets in terms of sort of demand profile and interest levels?

Question: William Jones - Redburn Atlantic - Analyst : I'll try three if I can, please. The first, just come back on the 5% increase in the private ASP. Would you be drawn on how much of that you think is mix versus underlying? Second was around the bulk sale component of the sales rate, which I think continues to run at around the 0.1% mark. Do you think that's the new norm now? Or do you expect that maybe to tell slightly lower over the next year or so? And then the last one was if we put together the cost comments you're making today around heat pumps or planning or embedded build cost inflation. Does any of that change your view of the embedded land bank gross margin as we saw in June? Or was that kind of factored incorrectly at that point?

Question: Zaim Beekawa - JPMorgan - Analyst : Just two on my side. On the fire safety remediation, you mentioned the bulk of the work is completed over the next two years. Could you maybe attach a percentage to that? And then to come back on land, do you have a view on how much you're expecting to spend in the coming years?

Question: Glynis Johnson - Jefferies - Analyst : Just a couple for me, actually. I'm really going to drill down in terms of what you said earlier on in the call. You talked about the drag of previous build cost inflation impacting by I think you said GBP2 per square foot. But when I look at what that is relative to your price per square foot, that's still a really small number, it's smaller than a decline in your embedded margin. And it's much, much smaller than what you've seen in terms of how your margin is progressed. So can I just double check that GBP2 a square foot number because that would suggest the underlying profitability is actually much better. Second of all, just in terms of the electric heat pumps on 600, 700 plots. I assume that's just -- or can you confirm that's just a 2025 issue? Future home standard means you would have been handing over homes from 2026 that you would have had to assume would be fully electrified anyway. So this is just a slight pull forward of costs? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2024 / 9:00AM, PSN.L - Q3 2024 Persimmon PLC Trading Statement Call And then lastly, I'm going to push you and you're probably going to turn me down and say no. But the margin increase for next year that you're guiding to, and I appreciate you're not guiding to a number, but what proportion of that is coming from the better volumes and the operational leverage, getting you back towards that embedded margin? And what is coming from price over cost?

Question: Glynis Johnson - Jefferies - Analyst : Sorry, just in terms of the margin guidance. Can I just -- I'm not asking for a number, but directionally, is the margin guidance, which is for up next year purely volume? Is it volume less the difference between price or cost dragging it down? Are those elements moving you up?

Question: Harry Goad - Berenberg - Analyst : I've got two, please. So firstly, you made the comment on incentives still running at around 4% to 5% of ASP. Can you give us a little bit more detail there? I mean, do you see that pretty much every site? Or does that average reflect quite a big variance? I mean are there any sites, for example, where you've been able to reduce incentives so closer to 0? And then the second one was around the partnership strategy. Can you just remind us what you think the sort of on a sort of annualized basis, what you think the normalized sort of contribution from partnership sales will be, if you think about annual volumes? And will that be a number you'd expect to see across most sites on average? Or will it be disproportionately focused on some sites?

Question: Mark Howson - Dowgate Capital - Analyst : Thank you for the note on national insurance. I think obviously you're not alone in facing that. It's something we need to think about for all the companies. Just in terms of things that are in your own hands, is there anything you can do to perhaps accelerate some of your initiatives? You've got your own brick production, you've got space for. Is there anything you can do? These are much more controllable costs for you yourself.