Persimmon boasts strongest operating margins

The latest industry research by property development appraisal software , APRAO, has revealed that Persimmon has been the nation’s best performing major housebuilder over the last five years when it comes to operating margins.

APRAO analysed the operating margins of seven of the nation’s biggest housebuilders over the last five years to see which has put in the strongest performance on a consistent basis based on operating margins.

The operating margin is the total revenue from product sales once costs have been accounted for before adjustments are made for taxes, interests on debt and dividends paid to shareholders.

The research shows that when it comes to the tougher market conditions of the last year, only one housebuilder has seen an increase in its operating margin. Bellway has seen its operating margin increase from 8.7% in 2022 to 14.8% in 2023, while in contrast, Persimmon saw the largest reduction, with its operating margin falling by 13.3% year on year.

However, when analysing performance over the last five years, it’s Persimmon that tops that table as the housebuilder with the most consistent performance with respect to profits.

Since 2019, the firm has seen its operating margin sit at an average of 25.4% per year, the strongest performance of the seven housebuilders analysed by APRAO.

Berkeley Group sits second in this respect as the only other housebuilder to see its operating margin average above 20% per year since 2019 at 23%.

At 17.8% per year, Barratt Developments boasts the third most consistent operating margin, followed by Redrow (17%) and Taylor Wimpey (16.8%).

CEO of APRAO, Daniel Normal, said, “2023 has proved a more challenging year for the UK property market and the nation’s biggest housebuilders certainly haven’t been immune to cooling market conditions.

However, the topic of housing delivery is one that is rarely measured over such short periods of time and a longer term view provides a far stronger look at which housebuilders have performed best in recent times.

That said, it’s fair to say that of the seven biggest, there’s no bad apple amongst the bunch, with all of them posting consistently strong performances when it comes to their operating margins.”