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Persimmon's revenue falls as it works to improve customer satisfaction

“We enter the second half with our build programme well progressed, healthy rates of sale on site and an encouraging forward sales position," said chief executive Dave Jenkinson
Persimmon has delayed the release of new homes to make move-in dates more accurate

Persimmon PLC (LON:PSN) posted weaker first-half revenue as the housebuilder took action to improve customer satisfaction levels following complaints about the quality of homes and leasehold charges.

Revenue in the half year to June 30 fell to £1.75bn from £1.84bn a year ago, the group said in a trading update on Thursday.

The number of housing completions dropped to 7,584 from 8,072 and active sales outlets fell 8% to 345 sites, reflecting the decision to release new homes to market at a later stage of development to make move-in dates more accurate.

READ: Persimmon sales reservations fall amid customer relations push

Average selling prices edged up to £216,950 from £215,813 last year.

The move to delay the sales release of new homes is part of Persimmon’s strategy to improve customer service after receiving complaints about poor build quality, punitive leasehold terms and the excessive executive bonus scheme.

Persimmon has also made investments in the customer care team, operations and technology.

This month the company will extend cover on any faults in homes during the first week of occupation as part of a new customer retention scheme.  

The group said its customer satisfaction rating, as measured by the Home Builders Federation, had perked up on the back of its initiatives.

'Strong forward book position' 

"Our progress on customer service shows that Persimmon is listening carefully to all stakeholders and making the changes needed to position the business for the future, while maintaining a robust trading performance,” said chief executive Dave Jenkinson.

“We enter the second half with our build programme well progressed, healthy rates of sale on site and an encouraging forward sales position.”

At the end of June, the group had forward sales on new homes of £1.62bn, compared to £1.68bn a year ago.

The average selling price of the 4,400 new homes sold forward into the private market was £238,350, up from £236,700 last year. New homes sold forward to housing association partners had an average selling price of £120,900.

Persimmon continues to expect an underlying housing operating profit margin of 30.8% for the first half, the same level achieved in the 2018 financial year.

Shares fell 2.3% to 1,940p in morning trading. 

Softer volumes but margins better than expected, says analyst 

Peel Hunt left its recommendation on the shares at 'hold' with a target price of 2,025p.

"The first half update points to a slightly softer volume picture as the group has worked to improve quality and customer service by delaying site releases," the broker said. 

"The margin profile however looks slightly better than expected, meaning there should be limited changes to overall forecasts, albeit with a bigger second half bias.

"The shares have struggled year to date, especially against their bigger peers, while it’s also worth flagging that the dividend yield is now 12%."


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