HOUSEBUILDER Persimmon has posted a dip in profits as its efforts to improve quality slowed down the number of properties being sold.
The group reported profit before tax of £509.3 million for the six months to June 30, 2019, down from £516.3m.
Total group revenue was 4.5 per cent lower at £1.75 billion, as the number of new homes sold slowed to 7,584 compared with 8,072 this time last year.
The York-headquartered firm said 720 homes were sold in Scotland in the first half, against slightly more last year and 776 in the same period in 2017, with the average house price sitting at £186,319, up 4% on last year, and 8,249 plots secured across the country.
READ MORE: Housebuilder moves to restore reputation on customer service
Persimmon had signalled the lower sales rate in July, saying it had put the brakes on the process to ensure better customer satisfaction.
The company faced criticism last year over large bonuses to executives, despite relatively low customer satisfaction ratings.
Dave Jenkinson, new chief executive, said the latest numbers showed it had made progress.
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 HBF survey year are showing improvement and I am particularly pleased that, in July, Persimmon became the first house-builder to introduce a retention scheme for customers, placing us at the forefront of strengthened consumer rights for home-buyers.”
READ MORE: Housebuilder’s independent customer care review
Sophie Lund-Yates, of Hargreaves Lansdown, said that “in normal circumstances a drop in completions and revenues would be a warning sign for a housebuilder, but while the blip to the top line might not make for pleasant reading, it’s actually good to see Persimmon applying the brakes”.
Russ Mould, of AJ Bell, said its margins are “still industry-leading but their peak levels ultimately proved unsustainable and they are likely to continue to narrow as costs increase and as house prices stall”. David Madden, of CMC Markets UK, said: “It is clear the days of monster profits in the housing sector are over, but it is worth remembering how far the company has travelled, as net income might have slid on the year, but it is still more than double than the 2014 level.”
He said materials and labour costs remain high “and that is a concern for the industry”.
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