Sales at Persimmon have fallen as the housebuilder scrambles to improve build quality and restore its tarnished reputation, after a barrage of criticism over its poorly built homes and huge executive payouts.
After a deluge of complaints from customers, the company commissioned an independent review last year. The report, which was published a month ago, accused Persimmon of a “systemic nationwide failure” to install fire-stopping cavity barriers that left customers exposed to an “intolerable” fire risk. The damning review said the failure to meet minimum building standards was “a manifestation of poor culture” at the firm.
Persimmon completed 15,855 homes last year, down 4% from the previous year when it built 16,449 and made an annual profit of £1.09bn – the biggest ever reported by a UK housebuilder. Revenues fell 2.4% to £3.65bn in 2019, and City analysts are forecasting a small drop in pre-tax profits to £1.04bn. At that level of profit the firm is still making nearly £66,000 on every home it builds. The firm’s forward sales were down 3% to £1.4m at the end of the year.
Dave Jenkinson, the chief executive who took over from Jeff Fairburn, who was ousted in 2018 after public outcry over his £75m annual bonus, said Persimmon was making good progress with its plan to improve customer care, which included “putting customers before volume”.
The company also revealed that Claire Thomas, a former senior vice-president of human resources at GlaxoSmithKline, ha quit as a non-executive director at Persimmon after just six months.
Thomas said she wanted to work for a bigger international company, and praised Persimmon’s “clear and determined efforts to transform the business”. She had been brought in to strengthen the company’s remuneration and nomination committees, and the chairman, Roger Devlin, said he was “disappointed to see her leave”.
Critics say standards and regulation of new-build properties in Britain are too lax and have described checks during the building process as ineffective. There are hopes that the proposed new homes ombudsman will lead to improvements.
Persimmon’s smaller rival Bovis Homes, which has renamed itself Vistry Group, released a more upbeat set of figures, after recovering from its own scandal over poor build quality. It completed 3,867 homes last year, up 3%, and said it would slightly exceed City forecasts of a profit before tax of £181.6m, equal to a profit of £47,000 for each house built.
The company was forced to pay out £7m in compensation and overhaul its building process after complaints from customers about problems ranging from leaks and drainage issues to bent walls and creaking floors.
The firm insists the problems are now behind it. However, there are still a number of complaints being voiced on a Facebook group of about 1,000 Bovis homeowners.
After the acquisition of Linden Homes from Galliford Try, the company expects to build about 10,000 homes a year.
