Housebuilder Persimmon bullish as profits fall amid quality increase

Housebuilder Persimmon says it is laying the foundations for continued success after forgoing profit and sales growth for an increased focus on customer satisfaction.

The company has hailed its “strong position”, saying its existing balance sheet dip will be outweighed by the long-term benefits of its drive to increase quality across its estates.

The business, which has an office in Newcastle Great Park, saw pre-tax profit fall £7 million on a year ago to £509.3 million in the six months to June 30.

The company’s results, revealed today (Tuesday, August 20), also showed sales stood at 7,584, compared to 8,072 a year ago, with total group revenue 4.5 per cent lower at £1.754 billion.

However, bosses say they remain undaunted by the reversals, emphasising the forecast benefits of a previously revealed plan to take a more targeted approach to the timing of sales releases on a number of sites.

The firm, which also has offices in Bowburn, County Durham, and Thornaby, near Stockton, is progressing builds to a more advanced stage before releasing homes for sale as part of a drive to increase quality.

Rolling out a retention scheme to address faults found during owners’ first week of occupation, Persimmon is also introducing a new team of independent quality inspectors, which Dave Jenkinson, group chief executive, says will help the business achieve its satisfaction goals.

Revealing industry figures show its reputation with customers is strengthening, he added the company’s decision to delay sales releases in higher demand areas is beginning to deliver benefits.

He said: “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.

“Our customer satisfaction ratings for the current Home Builders Federation survey year are showing improvement and I am particularly pleased that, in July, we became the first housebuilder to introduce a retention scheme for customers placing us at the forefront of strengthened consumer rights for homebuyers.

“The improvements to our customer service approach had two main impacts in the period.

“First, customer service spend increased by around 40 per cent year-on-year and these additional initiatives are anticipated to increase our annual customer care costs by an estimated £15 million.

“Second, and as noted earlier in the year, our decision to invest an additional £140 million in work in progress – as we held back some sites for later sales release to give customers more accurate moving-in dates – reduced the group’s overall sales volumes.

“Allowing for these impacts, trading in the first half of 2019 was strong.

“I am proud of the commitment and dedication our teams have shown in supporting the many initiatives we have introduced to deliver a step change in our customers’ experience,” added Dave, who also revealed Persimmon helped more first-time buyers onto the property ladder during the half-year period – 3,082 sales – than any other UK housebuilder.

“I am confident the progress we are making with our initiatives, our strong forward build, healthy forward sales and robust balance sheet place the group in a strong position for the second half.”

Persimmon has developments across the North East, which include a site at Aykley Heads, on the outskirts of Durham City, and further estates in Hebburn, Sunderland and Stockton.