Revenues dampened at Persimmon
Revenues at listed York-headquartered housebuilder Permisson have fallen in the wake of its bonus scheme issues which saw its previous CEO step down.
This morning publishing a trading update for the half-year period, from 1 January 2019 to 30 June 2019, the firm said its revenues stood at £1.7bn – down from £1.8bn during the same period in 2018.
Housing revenues for the first six months were reported at £1.6bn – 5.6% lower than the £1.7bn in the prior year. New housing legal completion volumes dropped from 8,072 last year to 7,584 this H1, at an average selling price of £216,950 (2018: £215,813).
The value of the Group’s total forward sales of new homes at 30 June 2019 stood at £1.6bn (2018: £1.6bn).
Persimmon said the average selling price of the 4,400 new homes sold forward into the private sales market was £238,350 – slightly ahead of the prior year (2018: £236,700). The Group’s new homes sold forward to its housing association partners at 30 June 2019 had an average selling price of £120,900.
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.
In February, Persimmon confirmed that David Jenkinson had been appointed as its new Group Chief Executive.
This morning, Jenkinson said the firm was focusing on improving customer satisfaction levels.
He added that the company’s decision to delay sales release to a later stage of construction in higher demand locations was “beginning to deliver anticipated benefits.”
Persimmon described customer service as its now “top priority.” It said it was investing in “a number of initiatives to deliver these improvements” including giving customers greater accuracy of anticipated moving-in dates.
Persimmon said: “To help achieve this we are adopting a more targeted approach to the timing of new home sales releases on certain sites and plots where demand is particularly strong. As a result, the average number of active sales outlets through the first half was 345 sites, which was 8% lower than last year.
“As expected, these measures reduced the number of sales reservations that earlier sales release would attract.”
Jenkinson said: “I am pleased that there are some clear early signs that our focus on increasing the quality and service delivered to our customers is beginning to bear fruit, with some encouraging improvements being made right across the business. Although we are still in the early days of our improvement plans our customer satisfaction rating, as measured by the HBF, has increased during the period.
“Our progress on customer service shows that Persimmon is listening carefully to all stakeholders and making the changes needed to position the business for the future, while maintaining a robust trading performance. We enter the second half with our build programme well progressed, healthy rates of sale on site and an encouraging forward sales position.”
Russ Mould, investment director at AJ Bell, said: “Housebuilder Persimmon is pulling out all the stops to prove how important it is to the first-time buyers’ market. A trading update talks about how it is helping more first-time buyers on to the housing ladder than any other UK housebuilder and how customer satisfaction is improving.
“A cynic would suggest this is Persimmon’s way of trying to convince the Government that it shouldn’t be stripped of its right to sell Help to Buy homes following allegations of poor standards and hidden charges.
“The trading update reveals that sales volumes have fallen as a result of Persimmon’s decision to sell homes at a more advanced stage of construction. It has also been trying to improve build quality – more initiatives as part of Persimmon’s efforts to rebuild its tainted reputation.”
