House builder completed around 2,400 fewer homes due to fallout from Mini Budget

Persimmon told the stock market that, since the end of last year, it had been working to protect its cash position and provide the flexibility to pursue attractive growth opportunities in the longer term. 

It identified four areas where it could make these savings, including a recruitment freeze across the group, which reduced its headcount by nearly 300 during this period. 

In addition, it is reviewing value-engineering across the group to share lessons and opportunities for efficiency, as well as further procurement savings. 

This involves a plot-by-plot, site-by-site review to identify areas for cost savings or value enhancement that do not compromise quality. 

The current affordability pressures in the market, alongside cost inflation, are leading the house builder to identify opportunities to secure savings in building specifications that it believes are less important to customers and do not compromise on quality.

Finally, Persimmon is reviewing its sub-contractor pricing on a more frequent basis to identify opportunities to secure greater savings. 

The house builder also told the stock market that it had “maintained positive progress on [its] building safety remediation programme”, with work on 36 of 80 developments completed. The £350m provision set aside for this work in March remains unchanged.

Persimmon said it had a forward sales position of £1.6bn, which is 30% lower than the previous year.

Within that figure, private sales amounted to £875.9m, up 83% compared with 1 January 2023.

The house builder is still expecting its completions for the year to be at least 9,000, which it said was “the top end of our previously indicated range”.

Dean Finch, group chief executive at Persimmon, said: “Against a backdrop of higher mortgage rates, the removal of Help to Buy and significant market uncertainty, Persimmon has delivered a robust sales rate, excluding bulk sales, whilst growing the private average selling price in our forward order book and also securing cost savings. We are on track to deliver profit expectations for the year and are building a platform for future growth.

“Our pricing overall has remained resilient, with continued positive momentum in the forward order book. However, the reduced volumes in the first half of the year has negatively affected our operating margins, as we predicted earlier in the year. As we look forward, we expect increasing completions to result in improving operating margins.

“With the historic undersupply of homes, the longer-term outlook for housing remains positive. Persimmon has a proven track record of delivering strong returns through the cycle. I am confident that the combination of a relentless focus on our key enduring strengths while enhancing key capabilities will again drive strong returns through the next cycle.”