Profits top £1bn at Persimmon as it names new CEO
York-headquartered Persimmon Homes has this morning reported its pre-tax profits hit £1bn in 2018 – the first housing company to hit the milestone – in a year it was criticised for its bonus scheme and saw its CEO step down.
The listed housebuilding firm is now the UK’s most profitable housebuilder, reporting a 13% increase in group pre-tax profit to £1.091bn (2017: £0.966bn). Persimmon said that its legal completion volumes increased by 406 new homes to 16,449 (2017: 16,043) in the year, with an average selling price of £215,563, up 1% year on year (2017: £213,321). Its group revenue for the year increased by 4% to £3.74bn (2017: £3.60bn).
The housebuilder said that 17,092 plots of land were acquired in the year, with 3,772 plots successfully converted from the group’s strategic land portfolio. Net cash stood at £1.048bn at 31 December 2018 (2017: £1.303bn).
Last year, the firm was criticised for its long term incentive scheme which saw its CEO, Jeff Fairburn, step down following the controversy surrounding his £75m bonus.
This morning, Persimmon confirmed that David Jenkinson has been appointed as its new Group Chief Executive with immediate effect. Jenkinson was appointed interim CEO in November 2018. He has been with Persimmon in a number of roles for 22 years, most recently as Group Managing Director. He has been a member of the Persimmon board for over five years, with particular responsibility for land purchase.
On Saturday it was reported by the Times newspaper that Persimmon could lose its Help to Buy contract following a review of the scheme by government. The news sparked a 4.7% drop in the group’s share price yesterday.
James Brokenshire, the housing secretary, is reviewing Persimmon’s participation in the government Help To Buy scheme, which accounted for half of the homes it built last year, after allegations of poor standards and hidden charges. Since Help to Buy was introduced, Persimmon’s profit per house has almost tripled, rising from £22,114 in 2012 to £60,219 in 2018.
This morning, Jenkinson said: “Our results for 2018 reflect our successful focus on offering attractively priced new homes primarily to the first time buyer and first time mover markets, where housing need is greatest. This strategy has enabled Persimmon to grow its construction volumes by more than 75% since 2012, making a significant contribution to UK housing supply. My focus is to build on this strong platform, maintaining our operational momentum, but also implementing a number of necessary new initiatives in customer care. A wide range of projects to improve customer satisfaction commenced in late 2018 and the initial results have been encouraging, giving us confidence in our ability to make progress in this important area. We continue to invest in our teams, systems, and our off-site manufacturing capabilities to support the Group’s further growth.”
“We are also taking action to address the shortage of skills in the industry, with almost 15% of our workforce in structured training programmes across the business. We continue to nurture and develop our best talent and I am delighted that over 570 colleagues were promoted during the last two years recognising their success in developing their careers with Persimmon. The Group is proud to support over 20,000*** construction jobs and over 30,000*** jobs in our supply chain.”
“Whilst the sales outlook remains subject to a degree of uncertainty at the start of any financial year, at this point the Group’s sales are in line with management’s expectations. Given our strong prior year comparatives, the current increased uncertainties with respect to the future performance of the UK economy and the planned later sales releases in the early part of the year, we are encouraged by the levels of customer interest across the UK. Including legal completions taken so far in 2019, the Group has a strong forward sales position at £2.02bn and we currently anticipate delivering a similar level of legal completions during 2019 as in the prior year.”
Roger Devlin, Group Chairman, said: “Persimmon is changing. In his short time as interim CEO Dave Jenkinson has introduced new approaches to customer satisfaction and colleague engagement, whilst also ensuring that the Group delivered another year of growth. These changes are illustrative of wider efforts across the Group to evolve our processes and practices to pursue excellence across all aspects of our business. Achieving further progress with these initiatives will be a key priority for Dave in his new post as CEO.
“The Board remains confident in the Group’s long term prospects.”
