Persimmon shares slipped after the housebuilder issued a thinly detailed trading update which suggested flat sales for the quarter.
The company swapped out its standard measure of private sales per site per week for one that counted total sales per site for the entire period from July 1 to November 7, saying they were “in line with the prior year”.
It noted that the comparable figures from a year earlier were particularly high – up 14% from 2015 – due to “particularly strong sales post the 2016 EU referendum”.
The housebuilder said that, while total sales outlet numbers were 10% lower over the autumn period to date, customer activity had “strengthened in line with traditional seasonality” and consumer confidence was “resilient”.
Persimmon said it was fully sold up for the current year and had around £909 million in forward sales reserved beyond 2017, marking a 10% increase from 2016.
“Pricing remains firm across our regional markets,” the company said.
But it was not enough to buoy Persimmon’s share price, which tumbled around 3.4% or 97p to 2,777p in morning trading.
Robin Hardy, an analyst for Shore Capital Markets, said the third-quarter trading update was “light on detail and has a much more rhetorical tone”.
He added: “There is no mention of sale rates, pricing or margins, with the only figure mentioned being the forward sold position excluding the current year, which is not a figure for which we have a meaningful comparison.”
Without further information, he said there was a possibility that Persimmon’s performance is actually down from a year earlier.
“The sales rate makes reference to being ahead of 2015 rather than 2016 so we cannot see if that is ahead – in the interim statement in August this important measure was just 2% ahead of the prior year, so could it actually have slipped behind 2016.”
Together, a potentially lower sales rate and the drop in active sites could have implications” for both the 2018 and 2019 financial year, Mr Hardy said.
“Pricing is reported as being “firm” but we cannot deduce anything useful from this,” he added.
Persimmon said its management “remain focused on the cash efficiency of group operations”, and that strong cash generation was key to delivering its long-term strategy.
It said its cash balance by year-end is likely to be higher, have coming in at around £1.1 billion as of June 30.
Mr Hardy warned that tough market conditions are unlikely to ease up for the industry.
“We continue to see stiffening headwinds for the housebuilders from a softening market climate, with a much weaker pricing outlook, rising costs and a loss of confidence in pricing by both buyers and estate agents.
“We still believe that there serious threat of a mean reversion in margins as lower house price inflation means that margins will no longer be able to exceed the initially expected returns when land was acquired.”