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Persimmon CEO to step down

The house-builder continued to suffer a decline in completions in 2019, as it held back releasing new homes
February 27, 2020

Persimmon (PSN) continued efforts to improve the quality of its homes last year, but the architect and leader of that turnaround plan, chief executive David Jenkinson, has announced his intention to step down from the role after just over a year in the job. A board-led search for his replacement is now underway, during which time Mr Jenkinson will remain in post.

IC TIP: Hold at 2,922p

In 2019, the outgoing CEO's drive to reduce snagging issues and improve the accuracy of move-in times resulted in a 4 per cent decline in completions, and reflected the later sales release of in-demand homes under construction. That, combined with flat average selling prices, increased investment in customer service resources and build cost inflation, meant the underlying new house margin declined to 30.3 per cent, from 30.8 per cent in the prior-year period.

Some of the benefits of that increased spending has started to emerge, and management expects a score of at least four stars in the Home Builders Federation’s National New Homes Survey. Last year, the group was awarded three stars – the lowest score of all major housebuilders in the survey.

Bloomberg consensus forecasts an adjusted EPS of 273p for 2020, rising to 278p in 2021.

PERSIMMON (PSN)   
ORD PRICE:2,922pMARKET VALUE:£9.32bn
TOUCH:2,921-2,924p12-MONTH HIGH:3,328pLOW: 1,803p
DIVIDEND YIELD:8.0%PE RATIO:11
NET ASSET VALUE:1022pNET CASH:£844m
Year to 31 DecTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20152.900.63170110
20163.140.78203110*
20173.600.97255235
20183.741.09283235
20193.651.04267235
% change-2-5-6-
Ex-div:5 Mar   
Payment:2 Apr   
^Including £8.9m lease liability. *Excluding additional dividend of 25p a share.