20th Aug 2019 07:50
(Alliance News) - Fewer new home sales resulted in a decline in Persimmon PLC's interim revenue and profit, the company reported on Tuesday.
In the six months to June, the FTSE 100 housebuilder sold 7,584 new homes, down 6.0% on the previous year, with revenue declining 4.9% to GBP1.75 billion and new home revenue down 5.2% to GBP1.65 billion.
Persimmon said there has been "good" demand across all regions in the UK, though there has been "a little less urgency" from those buying more expensive homes.
The average selling price of a new home was GBP216,942, slightly higher, by 0.5%, than the average price in first half of 2018.
Persimmon's pretax profit declined 1.4% on the previous year to GBP509.3 million with the underlying new house operating profit margin improving to 31.0% from 29.7% year-on-year. However, it has fallen from 31.8% from the second half of 2018.
"Improving the quality and service delivered to our customers remains our top priority, and I am encouraged with the progress made in the first half, which clearly shows Persimmon is changing," said Chief Executive Dave Jenkinson.
"Our customer satisfaction ratings for the current Home Builders Federation survey year are showing improvement, and I am particularly pleased that, in July, Persimmon became the first housebuilder to introduce a retention scheme for customers placing us at the forefront of strengthened consumer rights for homebuyers."
"The improvements to our customer service approach had two main impacts in the period. First, customer service spend increased by 40% year on year and these additional initiatives are anticipated to increase our annual customer care costs by an estimated GBP15 million," he continued.
"Second, and as noted earlier in the year, our decision to invest an additional GBP140 million in work in progress as we held back some sites for later sales release to give customers more accurate moving-in dates reduced the group's overall sales volumes. Allowing for these impacts, Persimmon's trading in the first half of 2019 was strong."
Jenkinson became Persimmon's CEO on a full-time basis in February, following the departure of former CEO Jeff Fairburn in November last year over a row over pay. Jenkinson had been serving as interim CEO since then, having previously served as managing director.
Looking ahead, Persimmon's forward sales are "strong" at GBP2.05 billion, and the company said it is well-positioned for a good second half. However, it warned on rising cost pressures.
"We have continued to experience some pressure with respect to the cost and availability of certain materials in the supply chain as the output from the industry continues to expand. We currently anticipate that cost inflation for the group will be around 4% for the current year. The group remains focused on self-help measures to mitigate these challenges. These include the use of the group's standard house types, utilisation of in-house manufactured brick and our collaborative approach to working with our sub-contractors and suppliers," Chair Roger Devlin said.
Related Shares:
Persimmon