Housebuilder benefits from decision not to furlough staff during the spring lockdown

Persimmon saw revenue fall by just 9% in 2020, despite the covid-19 crisis, after the housebuilder decided to keep staff working during the spring lockdown.

In an end-of-year trading update published this morning, the firm reported revenue of £3.33bn, down from £3.65bn in 2019.

It said the revenues came from the construction of 13,575 homes in 2020, down 14% from the 15,855 built in 2019, which were sold at an average price 7% up on 2019.

The drop in revenue at Persimmon contrasts with a much bigger impact on trading from the spring lockdown seen by housebuilders that furloughed staff during the crisis. Vistry yesterday reported that 2020 completions in its housebuilding business were down by a third on 2019.

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Dean Finch, group chief executive at Persimmon (pictured), said the “robust performance” for the year had been possible because of the firm’s “advanced build coming into the year, an agile and effective response to the covid-19 pandemic and resilient customer demand.”

In the City statement, Persimmon said that the strong market in the second half of the year had mitigated the impact it did see from the virtual closure of the housing market between late March and early May, but warned that sales had returned to more normal levels by the last quarter of the year.

Overall, it said sales per site per week in the second half had been 39% above the level in 2019, but that “weekly sales rate during the final quarter of the year trended towards more normalised levels” given “constraints on stock availability” and delays caused by the late opening of the new Help to Buy scheme due to start in April.

The company said that the increase in average selling price was primarily due to a far larger proportion of homes than last year being sold on the private market, rather than to affordable housing providers. While private sales fell by 9% to 11,363, affordable home completions dropped by more than a third to 2,212.

The firm said forward sales were now 25% above the level seen at the end of 2019, at £1.7bn, at said it was currently delivering a “five-star” quality rating under the HBF’s star rating system, according to customer surveys. The performance on quality comes after huge problems at Persimmon over build quality which culminated in 2019 with an excoriating independent report criticising the firm for a “systemic nationwide” failure to build fire safe homes.

Despite the strong demand for homes and healthy forward sales, Persimmon said there were “uncertainties” remaining around the impact of the pandemic “particularly with regard to unemployment levels and consumer confidence”, and that the firm was “also mindful of the potential impact of an end to the stamp duty holiday.”

Dean Finch said: “Recent events have served to further demonstrate the continuing near term uncertainties arising from the Covid-19 pandemic. However, we believe that the longer term fundamentals of the UK housing market remain resilient and I am confident Persimmon will continue to deliver superior long term value for all of its stakeholders.”

Cenkos analyst Kevin Cammack said the trading update showed that “Persimmon had a cracking 2020 relative to its peers which for the most part reflects its decision to pretty much keep working through lockdown, the period which devastated the sales and earnings of most of the sector.”