Persimmon PLC (LON:PSN) has reported a dip in first-half profits after the under-fire housebuilder forked out an extra £155mln in a bid to improve the quality of its homes and customer service.
The FTSE 100 company is trying to rebuild its reputation having fielded a wave of customer complaints about shoddy workmanship in some of its new homes.
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As it rushed to hand over the keys on time, buyers were reporting issues such as leaks, damp and cracked windows.
One couple reportedly found 700 faults in their new home, while many others took to the national press to vent their frustrations.
Under new chief executive Dave Jenkinson, Persimmon has slowed the pace at which it sells homes and pushed back moving-in dates to make sure the properties are completed on time and to an acceptable standard.
Property sales, profits fall
The company spent an extra £142mln fixing snags and caryying out more thorough checks in the first six months of 2019, while customer care costs are also expected to rise by £15mln this year.
As analysts had expected, the number of new homes sold in the six months ended 30 June fell to 7,584 (H1 18: 8,072).
Pre-tax profits followed suit, dropping to £509.3mln from £516.3mln a year earlier.
‘Persimmon is changing’
“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,” said CEO Jenkinson.
“The improvements to our customer service approach had two main impacts in the period. First, customer service spend increased by c.40% year on year and these additional initiatives are anticipated to increase our annual customer care costs by an estimated £15mln.
"Second, and as noted earlier in the year, our decision to invest an additional c.£140mln 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, Persimmon's trading in the first half of 2019 was strong.”