Good day. Thank you for standing by. Welcome to the Persimmon Trading Update Analyst Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press * one-one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press * one and one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Dean Finch, CEO. Please go ahead.
Thank you. Good morning, everybody, and thank you for joining us. As usual, I'm joined this morning by Jason, Mike, Vicky, and team. Since it's only been a few weeks since we gave a very comprehensive update, I think we can probably keep this brief this morning. I would start by saying we are seeing across the country that confidence is slowly recovering. We're seeing increasing visitor numbers and growing transaction rates, which is resulting in a steady improvement in sales. If these conditions continue, and if it follows the usual seasonal pattern, we would expect volumes in 2023 to be towards the top end of the 8,000-9,000 range that we previously guided to. We set out clearly in the statement what our ASPs currently are in our order book.
Since last we spoke, ASP has been a little firmer than we thought it might have been, but so too has build cost inflation, which is remaining quite stubborn. The net result is a wash. Consequently, our margins for the current year are expected to be in the range of around 15%, as we clearly set out in our March presentation. This does mean that we see probably little opportunity at this stage for material outperformance in 2023. However, we have an excellent pipeline of land opportunity with strong margins ahead of us that should lead to meaningful outlet growth next year, which will allow us to begin delivering good profit and margin growth next year as we recover. In terms of operations, over the last couple of weeks, I've visited many sites across Scotland, the North East, and Teesside.
I'm really pleased to say our product and service continues to get better and better. Our prices are consistently lower than the competition, and it's given me great hope for the future success of the company. I think coupled with the strength of the outlet position and the growth that we give, as well as a continuing improvement in the service and product we provide, we're in really good shape for years ahead. With that, I will open it up for any questions, please.
Thank you. As a reminder, to ask a question, please press * one one on your telephone and wait for your name to be announced. To withdraw your question, please press * one and one again. Please stand by while we compile a Q&A roster. We will now take the first question. It comes from the line of Rajesh Patki from JP Morgan. Please go ahead. Your line is open.
Thank you. Good morning, all. I've got 3 questions, please. The first one is on incentives. Can you talk about how the incentive usage has evolved over the last couple of months, and if there is any regional variation of incentive levels required? Second one is on build cost inflation. You have noted limited signs of easing in the short term. I was just wondering there which key aspects have been more persistent than you were expecting. Thirdly, based on the guidance, can you comment on how you see this year's profitability split between H1 and H2? Thank you.
Good morning, Rajesh. maybe if I have a go at the first two, and Jason helps me out on the third one, obviously chipping in along the way. I mean, on incentives, it's very similar to what we said to you in March. You know, perhaps I'll broaden that out in a minute to talk about, you know, what we're seeing on prices in general. It's pretty firmly around about 3%, and there's not a huge regional variation around that average number. It's a little bit more in the South East and the South West. It's a little bit less in the Midlands and the North. There's not a great dispersion around that average.
I mean, I think what we are seeing, and I don't want to over-exaggerate it, but there are pockets of strength that we're seeing in terms of recovering in confidence. You know, in some locations, we're beginning to feel confident enough to be able to push ASPs. There's a bit of tension. You know, that is by no means a uniform picture across the piece at the moment, but it is encouraging to see and hear that and really not seeing that now for some 9 months. That's encouraging. In terms of build cost inflation, again, it's a similar story to what we said to you in March. It remains persistent.
We are seeing more reductions in some costs, for instance, big bear costs around the place. We are seeing maybe GBP 1,500, GBP 1,000 costs coming down. That's by no means a uniform picture across the country. For instance, we're may have seen that in the Northeast, where if you come to Yorkshire, which is where we are today, costs are firm. They're not going down yet. That's a mixed picture. Even within big bear costs, timber costs are falling. Anything that's got an energy related cost to it, that's got involving cement or key commodities that are driven by energy costs, they are still pretty flat.
You know, we're seeing, nearly double-digit plot cost inflation still, as, you know, that's why we're pointing to the margin squeeze, because ASP is not gonna cover that. I think, you know, it's interesting, if you look at, labor costs, that now there's appears to be a flatline, flatlining. Ground workers would be our example there. It's not fallen, but it's now stabilizing, which is interesting because obviously there's a split within those costs, 55% energy, 45% labor. They must be taking some pain in there to absorb that. Obviously we've asked ourselves why is that? Why with the slowdown, why are we not seeing greater reductions there?
Anecdotally, you know, what we're hearing and seeing around the place is, well, there's been a switch from residential to commercial, which is still strong in pockets. I think also what there may be an element of part exchange going on still because people around the country, I think are clearly trying to get ahead of the additional costs that will come in with the introduction of Part L in July. It'll be interesting to see what happens in the second half to groundwork the costs. Yes, it's a, it's a mixed picture. Some signs of moderation, overall it's still pretty low. Jason, do you want to talk about the split?
Sure. No, I think we'd see the trend line to be similar to last year, where the best way to put it in the formal guidance on that in last year was about 44% in the first half. It won't be massively different to that. We expect it is good.
Great. Thank you very much.
Thank you. One moment, please. We will now take the next question. It comes from the end of Chris Millington from Numis. Please go ahead. Your line is open.
Thank you. Thanks for taking the questions, guys. I just wanted to explore the sales rate trends a little bit further and just hoping you could perhaps provide a little bit of color over what's been happening over the last month or so. Whether or not you've seen any sort of just seasonal, I don't know, steadying of the sales rate since the back end of March. That's the first one, just a little bit of breakdown there. Next one's really just about your confidence on the outlet growth for 2024. You know, how material could that be? I suppose just allied to that, how quick could you recover volumes, you know, if the outlets were there just from a width point of view and a capacity point of view.
The final one's just is a bit of a follow on from the last one there. I just noticed last year you were quite heavily Q4 weighted on completions. I'm just wondering if we should be expecting the same sort of trends this year. That's it from me. Thank you.
Thank you. I think it, as I said at the top of the call, gradual improvement, steady improvement. We see it broadly stable in the last three or four weeks. It's steady around a level. It's not continuing to accelerate at the moment. But again, we expect that post Easter is pointing to a more normal seasonal pattern to establish itself. Perhaps, you know, in the wake of COVID, we sometimes since we've seen that more normal seasonal pattern. Those of us who have more experience of this, for instance, you know, Mike, who starts next week meeting, we'll be indicating that, you know, normally we should be now beginning to see things to steady up a bit for that season.
That's what we're seeing. Look, what is interesting is interest remains very high. Although, you know, what we are seeing is overall inquiries are down, the quality of those inquiries is very good. You're seeing good conversion. You know, that is very positive. Really that's across the piece, north and south across the country. Clearly, I think in the southeast, customers are still, particularly first time buyers, are struggling with affordability. Their interest remains unabated. In terms of outlet growth, look, it's too early to give you firm guidance.
I think Jason said, at March that, you know, we were targeting to get back to the 350 over the medium term, and certainly I would sign up to that too, which is, you know, where Persimmon was if you go back to 2018, 2019 levels, and that's certainly my ambition to do that over the medium term. As I said, we have an excellent pipeline of growth, which we've got a lot of control over in terms of securing acquisition. It all comes down to time, but I still think that we will see meaningful growth in outlet number over the course of next year. You know, I think you asked this in guides that we're not going to do volume.
I think that, it obviously it will be led to some extent by sales. In the absence of assuming the supply Help to Buy, I think we're seeing sales rates returning more to the long-term trend of 0.6-0.7. That's what we're seeing. As we grow our outlets, I'm confident that we will have the capacity to build them out. I certainly placed an answer to the last question that we are not quite so Q4 focused.
We certainly at the moment, in good shape for build for the first half, and we intend to keep that going over the summer, to get ahead of build, to allow us all to have a more enjoyable Christmas this year than we did last year. That is a firm ambition of the management team.
That's very helpful. Thanks, Dean. Can I just have a very quick follow up on that? I'm just curious if the outlets are there and the market's there, I mean, could the Persimmon grow volumes 20% in a year? I mean, would the business allow that, or would that be pushing it too hard?
No, I think that is entirely possible.
Got you. That's really helpful. Thanks for your time.
Thank you. We will now take the next question. It comes from the line of Aynsley Lammin from Investec. Please go ahead. Your line is open. Aynsley Lammin, Investec. Is your line on mute?
No. Can you hear me?
Yes. Thank you.
Thanks. Good morning. Just three questions from me, I think. Just firstly on the build costs. Just coming back on the comments you've made today, I think you've kind of said, you know, margins potentially around 15% and build cost inflation around 8%-9%. I mean, how much visibility do you have for the rest of the year, assuming materials are quite locked in at this point? What's your current expectation now for build cost inflation for the full year? Is it around the 8% that you kind of mentioned it could be a couple of weeks ago with your results? Secondly, I just wondered if you had any comments on the mortgage market. Are you still seeing that quite supportive and healthy in terms of lending and appetite there? Thirdly, just curious what your part exchange is running at.
I think it was running at 25%. Any changes to that? Thanks.
Morning, Aynsley. Look, I think you're right. We're pretty locked in for this year. Of course we will constantly be canvassing when we see opportunities, and we've been doing that during the course of the first quarter. You know, what's interesting, I suppose now is that compared to this time last year, our supply chain would have laughed in our face. Now, you know, it's more of orders get done well, but then they come back to us. There has been a change. I think in terms of this year, build cost inflation is locked in.
I think perhaps the thing we all missed at the start of the year when we discussed this was just the, the intensity of, of actually particularly ground workers and the amount of activity they got on, we were expecting that would, that would subdue a bit, but it hasn't happened. But I do wonder whether that's due in part elements of adherence. So that may moderate, but we're looking really for that to impact into twenty twenty-four rather than that having any meaningful impact in twenty twenty-three. Um, in terms of the mortgage market, um, yeah, uh, as, as I said, I think there is growing confidence. Uh, but still, uh, you know, it, it, it is notable there, there's, there's still a, an absence from the main demand.Of, of a higher PV product.
I think there's still for new build for first time buyers, there's still a lot of nervousness out there about that segment of the market. As again, I pointed to a few weeks ago, it's interesting to see the regionals beginning to take up the slack. I think, for instance, last week, Skipton announced a 95% LTV for new building. Can you comment on that, Jason?
Sure. You know, if you just sort of like be more creative. I had a call from one of the bank CSOs this morning to discuss expressing their continued desire, you know, to keep lending. Feel rates, you know, we've got mortgage rates have tracked up a little bit, you know, across the quarter. You know, we, you know, saw the news in early February, you know, expecting mortgage rates to come down. They can't defy gravity with 2-year gilts, you know, back up, you know, creeping toward 4%. That's been great. I think the banks are trying to be creative.
These are the, you know, loans like Skipton, the very small and more individual ones where, you know, you've got rental cover, so, you know, they can use that to underpin affordability. You know, similarly, they're trying to be as creative as possible. Banks like new build, they like the energy efficiency, they like the green nature of what we do. We do continue to see good support in general terms. It's that little bit of caution around, you know, like for some LFL move.
Thank you. interesting part, EPS volume and render as well.
It was 21% in the first quarter on a gross basis, but on a net basis. We continue to sell properties quickly, so there's no backlog that we're concerned about of that. Although the PX side of that has been a helpful product to marketing, but also, you know, helpful to support in great times. Again, I mean, look, the campaigns we've done towards bringing in the build, and then the sales teams are converting them. It, it's helpful to have that in your toolkit.
All right. Thank you very much.
Thank you. We will now take the next question. It comes from the line of Anthony Manning from Bank of America. Please go ahead. Your line is open.
Good morning. Thanks for the update. Could I just ask a question on the outlook for the margin? You've given us guidance for this year, but how will we see that progress, you know, as a multi-year story to get back to the levels that it once was? Is there any factors in there that we should think, or as the volumes and operating leverage come back, will that just improve quite rapidly? The second was just if you could maybe talk about the mix effect that you've seen in your sales, you know, through the ASP sales, seem very firm, but have you started to see differences in sales demand from your customer base? Are larger homes outselling those kind of first time buyer smaller homes in your portfolio? Thank you.
I think, well, I don't... I think that the impact of margin is cyclical, not structural. I think as we recover, we will see margins recover. The much discussed slide we put up in March remained good guidance and the most transparent that I've seen anywhere in the market. I don't think we need to go back to that. As we Persimmon continues to go around at excellent cost to revenue ratios, which continues to be industry leading and that will continue to underpin our margin.
As we admitted, back in March, you know, we saw this dip as somewhat transitory and we're wary to dig too deep into overhead because we want that resource to be there, that skill and experience to the long-term resource to be around to fuel growth again in the future. As volumes recover, I think margin will recover. Clearly, there's, you know, been an impact of build cost inflation, most in the area of ASP. I think ASP will recover in the course of time. I think in the course of time, we'll see a dampening of build cost inflation not impacting so much this year. I think, you know, it can't defy gravity forever. We've obviously had some big impacts on it, such as Ukraine, and other cost shocks.
Over time, I'm confident because of the scarcity of supply of what we build, it will recover. As I said, in terms of mix, if you've got equity in the market, then the market's good. You know, people are still very interested in, very active in three, four, five beds. The interest remains unabated for first-time buyers. The challenge is affordability and getting into the market. Having said that, you know, our Q1 completions, first-time buyers were the largest segment. They were 38%, and they were up from 33% in Q1 of last year. They're proportionately more completions this year than compared with last year.
They remain, you know, as you could confirm at the end of the day, first-time buyers are still the largest and the most active section of our market. I think Nationwide were out with something along that on Monday or Tuesday of this week. The interest is there, the demand is there, it's about fulfillment. Okay. Thank you very much for the call.
Thank you. We will now take the next question. It comes from the line of Jon Bell from Deutsche Bank. Please go ahead. Your line is open.
Good morning. Just wanna explore the bulk sales a little bit. Could you give us some color on the economics behind them, and anything you can add on geography and house type? Just a point of clarification on your previous comment. The first-time buyers, 38% Q1 completions. Is that 38% of total rather than private sales? Thank you.
No, it's private.
Private? Yeah. Okay.
I'd probably say, look, really the bulk sales we've done are to existing relationships. We're not in the market hunting out big bulk sale investors. It's not what we do. We highlighted this year just because it's had a more material impact on sales rates. We thought we should be aware that we did one. To pre-existing relationships, you know, it's not a large number of units, but they're customers we've had for years who buy, you know, maybe 30 units here, 20 units there around the country, in the Midlands and Scotland. It's about keeping those going. We're not actively scouring the market for big investor deals because we, you know, we think our demand will recover, and clearly it's a stronger margin for us.
I really think that's the right thing to do.
Thank you. If I could have just one follow-up, actually. In Wales, where Help to Buy was extended, what are you seeing on sales rates there?
They are certainly. The two largest companies are certainly selling stronger and faster than their English names and individual names.
Yeah. Okay. Thank you.
Thank you. We will now take the next question. It comes from the line of Charlie Campbell from Liberum. Please go ahead. Your line is open.
Morning. Thanks for taking the call. A couple of questions from me, please. Just the outlook for sort of 2024 outlets and volumes, and you've said subject to planning, but just wondered what the planning risk there is because, you know, on some readings of recent news, you'd be forgiven for thinking that planning is getting more and more difficult all the time. Just wondered if you could say anything about that. Then secondly, just I suppose just to help us a bit with first time buyers, are you seeing people sort of materially change the mortgage terms? I don't know, moving from 25 years to 30s and 35s and even longers, to try and help them with affordability. Thanks very much.
Certainly I think planning isn't getting any easier. You know, I think nevertheless we are pressing ahead with getting open. Some, you know, those we're opening now will obviously not deliver sales for 23, but they will deliver sales for 24. That will feed into the numbers for next year. We have, as I said, got a great pipeline that is really, you know, I'm really excited about and the power of growth in the year ahead for us, not just 24, but also beyond. Really nothing externally has improved on the planning team since last we spoke.
You know, it was a select committee this week, and the Housing Minister ably defended her Secretary of State who says one thing, but another. You know, we are seeing that in his own constituency, the 5-year plans by his councils are now being abandoned. Whilst the Housing Minister is assuring the select committee that won't impact housing volumes, there may be others who feel differently. I see other CEOs saying, I think it was in the press yesterday, and Greg also was in the press yesterday, confirming what I said about 2 minutes ago in terms of how difficult it was. Nevertheless, you know what I also highlighted back in March is, you know, we need to get better at what we do. That is having some marginal impact.
Yesterday we had a big scheme in Exeter, I think was, we don't control the scheme, but we are the leader. I think it's 1,500 units that we've got approved. Everybody in the company is probably in a state of shock because it got approved about 6 months faster than we thought it was going to, which is really good news and a vindication of the sort of things I was talking about in back in March, which is we just need to be nimble and adroit and savvy about presenting planners with what is they want to see and what they want to hear, and really getting attenuated to the local politics. If you do that right, then you can have great success.
We've got, you know, increasing examples of that within the business, and that is very much a focus. We've got a team really working on that internally to drive that, which is a bit different to, you know, where we've been in the past. Still difficult, but having success and we need to build on that success. Ultimately, you know, I am confident that you'll see more of the growth next year. In terms of your second question, no, I mean, I personally haven't seen, you know, I've seen it in the press, but I'm not sure I've seen many examples of that happening in practice. I think still the Bank of Mum and Dad is the most important bank for us.
You know, many of our first-time buyers, including my own, are fully exploiting their parents.
Thank you very much.
Thank you. We will now take the next question. It comes from the line of John Fraser-Andrews from HSBC. Please go ahead. Your line is open.
Thank you. Morning, Steve and the team there. Two for me, please. The first is on net pricing. It seems that sales incentives are pretty much unchanged. The question is, has there been any underlying house price inflation in the improvement in the forward order book year-on-year or versus last year? It has gone up or is that just inflation that happened before September 2022? Are we looking at a net price if incentives are 3% higher, are we looking at a net price that's 3% lower than the pre-September 2022 level? That's the first one.
s a request for just an update on how you're seeing the land market, any trends, and whether you're able to secure the land you did secure in Q1 at your 32% gross margin that was reported at the end of last year in balance sheet. Thank you.
Morning, John. Look, I think there is no uniform answer to that first question. I think it's still probably just about ahead. I think there's a buying impact going on on margin. I think since September, prices been, you know, pricing certainly hasn't gone forward, you've had to discount in order to make the sale. Therefore, you know, that has impacted the margin. However, as I did say earlier, what's interesting in the last few weeks, it's still very patchy and it's still very early days, we are seeing examples of being able certainly on certain products and certain geographies and certain locations to push pricing. We haven't seen that in 6-9 months now.
That's very welcome from our point of view. It will be interesting to see how that evolves over the next few weeks and months. As I said, highly selective at the moment, but wasn't there even a few weeks ago, I'll take that. In the land market, we continue to secure land at, you know, early rate. Very happy about that. You know, we've seen some easing I would say in the land market. Again, it's patchy where pockets where there's a lot of activity, there are other pockets where we are, you know, in a universe of one, which is a fantastic place to be.
Obviously land owners are looking ahead with a lot of political uncertainty. With the general election next year, what does that mean for taxation? That is something that is on landowners' minds. Again, that will be interesting to see how that evolves over the course of the next 18 months.
Thanks, Dean. Perhaps a supplementary on the land one. Obviously, you purchased about GBP 40 million worth of land in Q1, so probably quite a small sample of hurdle rates. Are you anticipating a pickup in your land purchase or purchases, or are you still watching and waiting for proper correction in land values?
Where we are seeing opportunities at our hurdle rates, we are going to transact. We're cautious, we're needing to manage our risk, but I don't think anybody around the table anyway is expecting that a land price collapse is just around the corner. Cautious, very disciplined about hurdle rates, but also conscious that we need to keep going and putting the harbor there.
What I said at the full year was, you know, credit was paid off this year for actually GBP 70. It's very weighted to Q1 actually. We're ahead of that on average. I also said there was probably somewhere more GBP 50 to GBP 200 on top of that. Probably if you look here today, two months on, more at the top end of that. You know, we'll see how things play out, of course, and absolutely endorse that Dean was there around discipline, margin. Equally, you know, as he knows, Greg's ambition, we need to continue to invest. That's the sort of level that, you know, I would guide you to at this stage.
Jason, was that the GBP 150-GBP 200 was your expectation for the full year on top of land purchases?
That was on top of land credits, that's right. If you put the top end of GBP 200 on top of GBP 270, you obviously get GBP 470 cash spend on land. I think that's a sort of that's probably just a slight tweak to the guidance I gave you previously.
Yeah. Thank you. Thanks, Jason. Thanks, Dean.
Thanks, Simon.
Thank you. We will now take the next question. It comes from Ami Galla from Citi. Please go ahead. Your line is open.
Yeah, good morning. Just a couple of follow-ups from me. The first one was on incentives. Now that you're seeing the recovery in sales rate, mortgage rates have come down from the peak as well, and sentiment seems to be better. Do you think there's scope for removing some of the incentives that were put in place as we kind of think about the open season? Again, you know, I know you've addressed this several times today, but as you kind of think about the sort of moving parts or drivers to margin recovery in 2024 and 2025, is it really pretty much linked to volume recovery, or do you think there's scope for that sort of bill cost versus pricing to improve as we go ahead into the coming years?
The next question was really just a clarification on your investment in TopHat. Appreciate, you know, you see that as the sort of future of construction going forward, but maybe if you could give us some color in terms of your thoughts in terms of that investment. You are already expanding your existing facility. What is it that is needed from a third party which you can't build on your own?
Morning, Amy. Thank you for that. Look, I mean, good questions. Clearly where, you know, we're seeing that price tension that, you know, I mentioned earlier on, then we're not going to give incentives. You know where that's possible, they will be squeezed. I don't want to set hairs running. You know, this is not a, you know, I'm at pains to point out this is very early days, and it's limited pockets where we're seeing it. I'm really highlighting that wasn't there even a few weeks ago. That's very positive. The volume recovery, I think, will be the key to margin improvement, over, you know, the course of, you know, the coming years.
Also, you know, we need to keep engineering that cost down and making that product more and more affordable. I don't see any abatement in interest and passion from customers to get on the housing ladder. I want to be, you know, I want Persimmon to be building a great product at the right price to capture that really strong demand. I guess that goes to what we're thinking around TopHat. You know, we know what we're doing when we're building houses. We're obviously investing in the new factory. It's GBP 7 million or GBP 8 million is the investment this year and GBP 17 a bit next. It's adding two things really.
Volumetric, as you look ahead, is inevitably going to be a component of modern methods of construction. It is inevitable. I don't think it is, you know, I don't think it is the answer. I think it is part of the answer, and I think it is complementary to what we do. I think TopHat are great. you know, I think they're very innovative. They're obviously expanding and looking for investment partners, you know, to Will be on our golden path. you know, we're with the company.
What is very interesting for us is their brick skin product and how we can integrate that with, you know, our panelization with our existing Space4 factory and the new one in particular as. I mean, it looks great. I don't know whether you've ever seen the product, but if, you know, you look at it from a distance, you cannot tell the difference to brickwork. It looks really excellent. You know, it could give a productivity leap if there's sufficient consumer acceptance of it in the years to come when you combine it with our panels. That's the exciting factor for us and one of the reasons why we've invested in it.
Thank you. We will now take the next question. It comes from the line of Sam Cullen from Peel Hunt. Please go ahead. Your line is open.
Yeah, morning, everyone. I've got kind of, two straight three questions. Both sort of follow-ups, really. First one is on a follow-up, another one on TopHat. How long have you been looking at it? Then you alluded to needing the volumes to kind of get the cost benefits. What sort of take-up does it need to drive those cost benefits? And what parts of the business would you be looking to use it in? Is this a thing they'll be using across just affordable, all of private, some of private, certain regions, certain regions where it won't be suitable? That's the first question.
The second one is pushing you a little bit on your answer to Chris's question earlier in the 20% growth you alluded to that might be possible. If I look back through the model, which thanks to the seasoned nature of my colleague, goes back to the mid-1980s. I think you've only grown by 1,800 units, which is 20% of 9,000 organically once, which was in 2014 when obviously you had the benefit of Help to Buy, and you've never grown by 20% a year without M&A since the late 1980s, I don't think. In essence, what's different this time that would mean 20% is achievable on an organic basis?
The obvious follow-up is if it wouldn't be organic, would you look at M&A?
I mean, we've been looking at TopHat for 18 months, two years now. I think you're right. Primarily, I think in terms of, I think adoption and volumetric, it may well be that this is most relevant to the affordable market initially, but over time, you know, it's very possible that private customer will grow an interest in it. I mean, Jason, do you want to add anything to add to that in terms of, I think there was a question around what volumes do we need to make it? No, I think that's right. We've obviously come from a I don't know, we've got a certain principle thing. We've come from a high level.
We don't know the shape of the recovery, but we assume it's been like that for some time. As we look forward, we do need to drive the number of outlets and the shape of that recovery. I think we can have some visibility of that, but not all of it, planning and other bits of it, the land market. You know, our confidence in that, you know, given the market is. I immediately say those two times short term that we've been able to lay it out, that we are seeking to build into that number of outlets and increase the trade of those as we can. We believe we'll be able to build to that sort of level with confidence in that. Looking at it as well.
Yeah, look, in the second half of last year, we only delivered at 15% at much, much higher level of quality, and that was in a period of absolute carnage. We were in the downstream last year as were very little. From recovery from trade, it was also very strong. Yeah, look, I think, I think what we're looking at for next year, last year was a, you know, the impact of the budget car crash was instant and dramatic. You're right to say that often good capability goes out of the industry. It does take some time to recover, but we've been investing in our resources. We'll see.
You know, we've got every confidence around here that we can do it and, you know, we can do it without having to rely on M&A.
Right. Thank you.
Thank you. I would now like to turn the conference back over to the speakers for closing remarks.
Okay. Thank you very much, all. Look, you know, we're very much in line with where we were back in March in terms of what we thought of our margins and bottom line profit. You know, we're very focused on 2024 and beyond and keep building our volumes. Thank you very much for your time and interest. Yeah. Bye, everyone.
This concludes today's conference call. Thank you for participating. You may now disconnect.