Persimmon profits dip as it sells fewer homes amid probe into quality of properties and customer service
- Persimmon reported profit before tax of £509.3m for the six months to 30 June
- The number of new homes sold fell to 7,584 compared with 8,072
- Average selling price rose to £216,942, but still lower than national average
Persimmon has posted a dip in profits as it sold less new homes amid efforts to improve quality.
The FTSE 100 housebuilder reported profit before tax of £509.3million for the six months to 30 June, down from £516.3million.
Total revenue was 4.5 per cent lower at £1.75billion, as the number of new homes sold fell to 7,584 compared with 8,072 this time last year.
Persimmon reported profit before tax of £509.3million for the six months to 30 June, down from £516.3 million
Shares in Persimmon rose 1.7 per cent to 1,894p following the posting of the update on Tuesday morning.
Persimmon had already unveiled the lower sales rate in July, saying it had put the brakes on the process to ensure better customer satisfaction.
The company faced criticism last year as it handed out hefty bonuses to executives, despite relatively low customer satisfaction ratings.
But new chief executive Dave Jenkinson said the latest numbers showed it had made progress.
‘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 that Persimmon is changing,’ he said.
‘Our customer satisfaction ratings for the current HBF survey year are showing improvement and I am particularly pleased that, in July, Persimmon became the first house-builder to introduce a retention scheme for customers, placing us at the forefront of strengthened consumer rights for home-buyers.’
The average selling price rose to £216,942, but remained lower than the national average for new-builds bought by owner-occupiers. More than half of private sales were to first-time buyers.
Ian Forrest, investment research analyst at The Share Centre commented: ‘The shares responded to the news with a 2 per cent rise in early trading, although they have been weak in recent months. These are reassuring figures as they show resilient prices and the company said consumer confidence remained ‘good’ despite all the political and economic uncertainties.’
‘That is unlikely to change any time soon and cost pressures also remain a headwind, but the steady cash flow will help to fund the healthy dividends,’ he continued. ‘Growth rates for the sector may have already peaked so we view the shares at best as a ‘hold’ for investors willing to accept a higher level of risk.’