Persimmon adds to housebuilder woes

UK housebuilder, Persimmon, reported a 64% slump in first-half pre-tax profits to £100.9 million for the half-year to the end of June, this compares with £281.1 million in the same period last year.

Along with many other housebuilders, Persimmon has been hit by the mortgage squeeze which has meant prospective buyers have been unable to secure a mortgage.

The housebuilder, which is the UK’s largest by market value, said that trading conditions were the most challenging in its recent history. Since the start of the year, it has slashed 2,000 jobs as it struggles to cope with the housing market slowdown.

The firm, which is based in York, also said profits were hit by costs related to shrinking the business and write-downs of its land values.

In the first half, the group said it sold 5,501 new homes, down from 8,002 sales in the same period of 2007. In addition, it slashed its dividend by 73% to 5p a share in an attempt to save cash ahead of a challenging autumn.

John White, Persimmon’s chairman, said despite the difficult conditions, the business has performed well.

When the market improves, we are optimistic that the business will move forward following a restructuring programme, concluded Mr White.

Last week, housebuilder Bellway reported a 45% fall in reservations of its homes in the second half of the financial year, compared with the same period last year.

Figures released yesterday from the Council of Mortgage Lenders revealed that gross mortgage lending rose slightly in July by 5% compared with June, however this is 27% lower compared with July 2007.

Meanwhile, business intelligence company, Datamonitor, said that the UK mortgage market will shrink by a fifth by the end of the year.

Datamonitor is forecasting that that mortgage lending will continue to fall, by a total of 19.3% this year and by a further 3% next year.

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