Persimmon sales robust as it fixes customer complaints

Shares of scandal-hit York house building giant Persimmon rose about 3% on Thursday after it published a third quarter trading statement for the period from July 1 to November 6, 2019.

Persimmon said its sales volumes in the first half of the year were 6% lower than last year as it switched its focus to quality rather than volume.

The firm has promised to improve the standard of its houses following criticism over faulty homes. 

“We are now fully sold up for the current year and have c. £950 million of forward sales reserved beyond 2019 (2018: c. £987 million) …” said Persimmon.

“In the first half of the year the group’s approach of releasing homes for sale only at a more advanced stage of construction resulted in total legally completed sales volumes reducing 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.”

Persimmon is still recovering from a scandal involving excessive executive compensation that led to the departure of former CEO Jeff Fairburn, scrutiny of its alleged practices with the UK government’s “Help to Buy” scheme — and criticism over faulty homes.

Persimmon shares rose 3% to around 2,343p to give the firm a current stock market value of around £7.2 billion.

Analysts at Jefferies wrote: “Persimmon is making strong progress in addressing the customer service issues. Doing this while still maintaining a robust order book impresses.”

Persimmon CEO Dave Jenkinson 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 house builder to introduce a customer retention scheme, placing us at the forefront of strengthened consumer rights for homebuyers …”