In a trading update, the Persimmon said that lower sales are in line with its expectations as it focusses on rebuilding its reputation. It reported that sales shrank 6% in the first half of the year, however it expects business to pick up in the winter months. Its shares rose more than 2% on the upbeat statement.
Dave Jenkinson, Group Chief Executive, said: “Persimmon’s top priority is the delivery of higher levels of quality and customer service through the implementation of its detailed customer care improvement plan. Central to this plan is putting customers before volume, with sales volumes in the first half of the year being 6% lower than last year, together with making significant additional investments in both our annual customer care resources, by c. £15m each year, and in the level of the Group’s work in progress, which amounted to c. £140m at 30 June 2019.
“The Group has continued to make good progress with these plans through the second half. On 1 July Persimmon became the first UK housebuilder to introduce a customer retention scheme, placing us at the forefront of strengthened consumer rights for homebuyers. I am pleased that our progress to date has resulted in Persimmon achieving the Four Star status level in the latest quarterly HBF customer satisfaction survey results and we are currently trending strongly ahead of the Four Star threshold. I am determined to ensure that the Group makes further headway by implementing our additional quality and customer care initiatives.
“I am confident that the continued successful implementation of our detailed customer care improvement plans together with our strengthened forward build position, healthy forward sales, robust balance sheet and industry-leading land holdings provide a sound platform for the successful future development of the Group.”
The group said that trading over the summer weeks was in line with expectations, with the usual pick-up in customer activity into the autumn season, noting that Brexit had not quashed customer enthusiasm for new homes. “Consumer confidence has remained resilient despite the continued uncertainties around the timing and nature of the UK’s withdrawal from the EU and the broader challenges surrounding the UK economy,” it said.
“The resilience of the housing market continues to reflect the strong levels of employment in the UK and some real wage growth, together with low interest rates and a competitive but disciplined mortgage market,” the statement added.
Persimmon has continued to restrict the release of new homes for sale in higher demand areas until construction reaches the advanced stage, both on selected new sites and, in some cases, on existing sites. In the first half of the year, this shrank sales volumes by 6% year-on-year to 7,584 homes.
“Whilst we currently expect our consistent application of this approach to result in a similar situation in the second half of the year, we anticipate that second half volumes will be greater than for the first half, reflecting the normal seasonality of the market,” the housebuilder said.
The housebuilder has injected £140m at June 2019 to improve quality and service and will continue with further investment through to the end of the year.
“We are mindful of the uncertainties facing the UK economy but remain keen to bring new developments through the planning system as promptly as possible to enable construction activity to commence and new homes to be delivered to the communities we serve,” Persimmon concluded.
