Housebuilding companies Persimmon and Vistry's full-year results will reflect strong demand in 2021 but uncertainties lie ahead.
Persimmon's sales should be up 10% in 2021, with profit before tax up 12%, as home building recovered from disrupted seasonal patterns of 2020 brought on by Covid restrictions.
Vistry's sales increase will be around 33%, according to the consensus forecast, with profits before tax growth of 141%, and a 5 percentage point increase to the company’s EBIT margin.
Looking at the bigger picture, house prices are still rising but the interest rate cycle has turned and this might threaten the stability of the home builders.
There have been two rate hikes already this year and two more are expected shortly though the fall-out from the situation in Ukraine will have some bearing on this.
The Royal Institution of Chartered Surveyors forecasts house price growth in 2022 between 3% and 5%, compared with 10.8% in 2021.
Rising costs are another headwind with Persimmon already flagging the issue, though so far it has been able to absorb these through higher selling prices.
The cladding uncertainty is another problem but UBS still expects a recovery in building to continue in 2022, with Persimmon’s guided volumes to recover to 95-100% of 2019 levels, and Vistry to grow housing volumes by 2%.
Wednesday 2 March
Interims: Hotel Chocolat Group PLC (AIM:HOTC) (Hotel Chocolat Group PLC (AIM:HOTC))
Finals: Apax Global Alpha Limited, Aviva PLC (LSE:AV.) (Aviva PLC (LSE:AV.)), Devro PLC (LSE:DVO) (Devro PLC (LSE:DVO)), Hiscox PLC, MusicMagpie PLC, Nichols PLC (AIM:NICL) (Nichols PLC (AIM:NICL)), Persimmon PLC (LSE:PSN) (Persimmon PLC (LSE:PSN)), Polymetal International PLC (LSE:POLY) (Polymetal International PLC (LSE:POLY)), Trustpilot Group PLC (LSE:TRST) (Trustpilot Group PLC (LSE:TRST)), Vistry Group PLC (LSE:VTY) (Vistry Group PLC (LSE:VTY))
AGMs: Ecofin Global Utilities and Infrastructure Trust PLC, Mila Resources PLC (LSE:MILA) (Mila Resources PLC (LSE:MILA)), Paragon Banking Group PLC (LSE:PAG) (Paragon Banking Group PLC (LSE:PAG)), River and Mercantile UK Micro Cap Investment Company
Economic Data: ISM Manufacturing (US), ISM Prices Paid (US), Crude Oil Inventories (US), BRC Shop Price Index (UK)