27th Feb 2020 08:37
(Alliance News) - Persimmon PLC said Thursday annual profit missed market expectations, with revenue and new home sales declining as the group prioritised the quality of sales over quantity.
The FTSE 100 housebuilder also announced that Chief Executive David Jenkinson will step down in due course, staying "for as long as the business requires".
Jenkinson has been part of Persimmon for 22 years, and was appointed permanently as CEO in 2019, after being appointed to the role on an interim basis in November 2018.
"Dave has the full support of the board and will continue to do so until he leaves. I am grateful that Dave has signalled his intention to step down at an early stage to give us the time to carry out a thorough search process and to continue the evolution of the business," said Chair Roger Devlin.
Shares in Persimmon were down 4.0% at 2,954.00 pence on Thursday in London.
For 2019, Persimmon reported pretax profit of GBP1.04 billion, down 4.6% from the year before, on revenue that declined by 2.4% to GBP3.65 billion.
Persimmon said back in January it expected pretax profit for 2019 to be "modestly ahead of market consensus", which stood at GBP1.04 billion, according to a Bloomberg survey cited by a company spokesperson.
During the year, Persimmon delivered 15,885 new homes to customers, down 4% from 16,449 the prior year, but at an average selling price of GBP215,709, up marginally year-on-year.
The revenue decline was due to a lower volumes of homes sold, as Persimmon delayed sales releases in higher demand locations to later stages of construction in order to improve the quality of the group's homes.
The group acquired 10,013 plots of new land in 2019, including 4,218 plots converted from Persimmon's own strategic land bank.
Persimmon will pay a final dividend of 110 pence per share, bringing the total payout to 235p, in-line with the year earlier.
Looking ahead, Persimmon said for the first eight weeks of 2020, its average private sales per site were 7% higher than the same period the year before. The group expects sales for 2020 to follow a similar pattern to 2019, and also expects delivering a similar number of legal completions.
"Improving build quality and the service delivered to our customers were our top priorities throughout 2019. Putting customers before volume is at the heart of our customer care improvement plan and, as a result, new home legal completion volumes were 4% lower year on year," Jenkinson said.
"Having commissioned the independent review in April, we were clear that we would not delay action until its completion in December and were engaged on a broad range of customer service and quality improvement initiatives throughout the year. We are confident these initiatives will add to our momentum this year," he continued.
By Dayo Laniyan; [email protected]
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