Persimmon sales slide after pay scandal and complaints over homes

Tom BelgerFinance and policy reporter
Persimmon saw sales slide. Photo: BRITAIN-EU/CONSTRUCTION REUTERS/Darren Staples
Persimmon saw sales slide. Photo: BRITAIN-EU/CONSTRUCTION REUTERS/Darren Staples

Shares dropped in Britain’s second biggest housebuilder Persimmon (PSN.L) after it reported its sales had slid by 4.5% over the first half of 2019.

The housebuilding giant said sales had dropped from £1.7bn to £1.6bn as it struggles with controversy over the quality and fire safety of its homes.

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The company has been trying to end “cases of poor workmanship” in construction, ordering an independent review of its work earlier this year. It has also begun selling properties at a later stage in the construction process, suggesting the sales dip could be a short-term blip.

It is trying to draw a line under widely reported buyer complaints about its properties, as well as a scandal over its former chief executive’s £75m bonus.

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But the figures also come just days after separate data showed the UK construction industry suffered its worst month since the financial crisis last month. Housebuilders blamed Brexit uncertainty for the decline.

The monthly IHS Markit/CIPS index released on Tuesday showed a significant contraction including in residential construction, with one analyst calling it “less of a slide than a sledgehammer.”

Persimmon, a FTSE 100 company, said improving customer service was now its “top priority” as it revealed it sold 7,584 homes in the six months to June 30, down from 8.072 a year earlier.

READ MORE: Sterling dips below $1.26 on Carney’s bleak economic forecast

Shares in Persimmon, which builds homes in more than 350 areas of the UK, were down nearly 2.5% in morning trading.

Russ Mould, investment director at AJ Bell. said: “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.”

He added: “Housebuilder Persimmon is pulling out all the stops to prove how important it is to the first-time buyers’ market.

“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.”

Dave Jenkinson, chief executive of Persimmon, 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.”

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