Persimmon

Ticker PSN

Today's data summary

Market closed
% change
+0.40%
Price Pence
2030.00
Change
+8.00
As of 21:33 19 Sep 2019
Market cap. Pound sterling
6,466.17 million
As of 21:33 19 Sep 2019

Latest updates

Shares in UK house builders and airlines tumble

New build homes
PA

Despite a slight rally in FTSE 100 shares, many of which could benefit from a devaluation of the pound, those that are heavily exposed to the UK economy, like house builders and domestic airlines, have tumbled this morning.

Investors are responding to news that Boris Johnson plans to suspend parliament in a move that increases the likelihood of a no-deal Brexit.

Home builders Taylor Wimpey, Persimmon and Barratt Developments were down between 2.2% and 2.5%. Meanwhile, British Airways owner IAG was down 1.6% and - on the FTSE 250 - Easyjet was down 3.5%.

Persimmon profits slip on customer investment

BBC Business News

First half profits at York-based house builder Persimmon have dipped by 1.4% to £509.3m.

Persimmon homes
Reuters

Dave Jenkinson - who took over as chief executive when Jeff Fairburn was forced out in a row over his £75m pay award - said there was now more of a focus on customer service after criticism of its homes.

"First, customer service spend increased by [about] 40% year on year and these additional initiatives are anticipated to increase our annual customer care costs by an estimated £15m.

"Second, and as noted earlier in the year, our decision to invest an additional £140m 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," he said.

Some 7,584 new homes were sold, compared with 8,072 a year earlier.

Persimmon 'supporting suppliers' ahead of Brexit

house sign
Reuters

Back to the house builder Persimmon which has announced its interim results.

Chairman Roger Devlin expects a slowdown even though "consumer confidence continues to benefit from high levels of employment, low interest rates, and a competitive mortgage market".

"As the summer holiday period draws to a close in early September we expect to experience the normal seasonal increase in customer activity".

He notes that Brexit, scheduled for 31 October, is "in the middle of the important autumn trading season".

"This undoubtedly creates uncertainty for consumers and business alike. However, Persimmon is in a strong position to take advantage of market conditions as events unfold. We are mindful of the slower second hand housing market and anticipate that there may be an increase in demand to support customers through the use of our part exchange facilities."

Brexit could also hit house building supplies and he said the company could "incur additional procurement costs including costs associated with potential weakness in sterling".

"Where necessary our suppliers are typically carrying increased stock holdings and/or are changing their ports of entry into the UK to mitigate risk of delays. Persimmon is supporting its suppliers with earlier and increased commitments where required".

Persimmon profits slip on customer investment

Persimmon sign
Reuters

First half profits at house builder Persimmon have dipped by 1.4% to £509.3m.

Dave Jenkinson - who took over as chief executive when Jeff Fairburn was forced out in a row over his £75m pay award - said there was now more of a focus on customer service after criticism of its homes.

"First, customer service spend increased by [around] 40% year on year and these additional initiatives are anticipated to increase our annual customer care costs by an estimated £15m. Second, and as noted earlier in the year, our decision to invest an additional £140m 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," he said.

Some 7,584 new homes were sold, compared with 8,072 a year earlier.

Further questions over quality of Persimmon homes

Wake up to Money presenter Louise Cooper tweets.

View more on twitter

Persimmon: Tackling its challenges

“These result show that Persimmon is facing up to some of its challenges head on. Of late, the main points of contention with the company had been around the quality of build and its customer service levels, which appear to be improving. While this comes at an initial cost of slightly lower revenues and a longer sales cycle, better customer service outcomes in the long-term could prove to be the right trade-off.

John Mooresenior investment manager at Brewin Dolphin

Persimmon needs Help to Buy answers

persimmon sign
Reuters

Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, has been looking at the Persimmon figures published earlier.

"By slowing down the amount of homes it delivers to market, Persimmon's top line is shaking a little, but it's acting in the longer term interests of the company," she said.

But, she added: "The end of Help to Buy in 2023 is a looming threat - over half of Persimmon's private homes in the first half were sold to first time buyers. The group's confident demand will remain stable in the lead up to the scheme's end, but with such a large chunk of sales relying on government help, investors will want to know how Persimmon plans to bridge any cracks in sales rates, should they arise".