Housebuilder Persimmon cuts 300 jobs after drop in demand | Persimmon

Persimmon, one of the UK’s largest housebuilders, has cut 300 jobs as weak demand linked to the fallout from the government’s autumn mini-budget sent half-year profits plunging by 65%.

The company said it was pushing ahead with a cost-cutting drive, as it grappled with a drop in customers committed to buying homes after the market meltdown, which pushed up interest rates and made mortgages more expensive for prospective homeowners.

The effect, which was compounded by the expiry of the government’s help-to-buy scheme, resulted in Persimmon building just 4,249 homes in the first half of the 2023, marking a 36% drop compared with the same period last year.

The slump in demand filtered through to Persimmon’s profits, which fell nearly two-thirds to £151m from £440m a year earlier.

Persimmon said efforts to cut £25m-worth of annual costs in light of the downturn had resulted in a near-300 drop in its headcount, as it refused to replace workers who quit their jobs or retired in the first half of the year. Persimmon had more than 5,860 employees as of December.

“We will continue to balance the need for cost savings with our aim of ensuring the company has the ability to respond quickly to an improvement in the market to achieve our objective of growing fastest in the industry – while delivering industry-leading margins – as market conditions improve,” Persimmon said.

It follows similar moves by the fellow housebuilder Bellway, which revealed on Wednesday that it was cutting jobs and shutting two of its divisions amid fears that house completions would “decrease materially” over the next 12 months.

However, Persimmon shares rose 3.7% on Thursday morning, valuing the company at £3.7bn. Investors appeared to be encouraged by comments from the chief executive, Dean Finch, who said the UK’s chronic home shortage would continue to propel the housing market.

“With the historic under-supply of homes the longer term outlook for housing remains positive,” Finch said. “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.”

He added that the housebuilder was still on track to meet profit forecasts for the full year and said Persimmon was “building a platform for future growth”.