Persimmon saw its shares slip more than 2% after announcing that its profits have dipped over 5% as it continues to focus on improving the build quality of its homes.
Persimmon’s total revenues1 for the first six months of 2019 were £1.754bn (2018: £1.836bn). Housing revenues for the first six months of £1.645bn were 5.6% lower than the prior year (2018: £1.742bn), with new housing legal completion volumes of 7,584 new homes (2018: 8,072) at an average selling price of c. £216,950 (2018: £215,813).
The average selling price of the c.4,400 new homes sold forward into the private sales market was c. £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 c. £120,900.
Dave Jenkinson, Group Chief Executive, 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. I look forward to giving further details of our progress at the interim results in August.”
Following strong criticism earlier in the year, Persimmon is investing in a number of initiatives to deliver improvements including giving customers greater accuracy of anticipated moving-in dates.
As a result, the average number of active sales outlets through the first half was c. 345 sites, which was c. 8% lower than last year. As expected, these measures reduced the number of sales reservations that earlier sales release would attract.
“We anticipate that the Group’s full-year volumes will reflect the continued focus on progressing our customer service initiatives which are important in positioning the business for the future,” the trading statement said. “These initiatives have included a greater focus on the handover of properties to customers which has impacted the volume of new homes completed in the period.”
A key part of this approach is advancing its build programmes to ensure a greater availability of homes for sale which are nearer to completion.
“The impact of these actions in this financial year will ultimately depend on the strength of market conditions in these locations during the second half as sites and plots are released for sale at the appropriate stage of construction,” it said. “As these customer service initiatives are being introduced there are some encouraging early signs of our customer service initiatives supporting improvement in the Group’s customer satisfaction rating as measured by the Home Builders Federation (HBF).”
The Group’s strategy includes the return of surplus capital to its shareholders. For 2019, a payment of 125p per share or £398m was paid to shareholders on 29 March with a further 110p per share, or £350m, paid on 2 July in line.
“The Independent Review of our quality and customer care operations has commenced and we look forward to its recommendations on the Group’s approach and processes in the final quarter of this year,” it said.
