One of the UK’s biggest housebuilders is expected to announce hundreds of job cuts today and provide a further insight into the woes in the industry.
York-based Persimmon, which trades as Charles Church, Persimmon Homes and Westbury Partnerships, is likely to announce around 1,000 redundancies as bosses wrestle with plunging sales and deteriorating market confidence.
The conditions may prompt it to announce a write-down in the value of its land holdings and a cut to its dividend in an effort to conserve cash.
In the group’s last update in April, Persimmon said it had seen a 24% drop in revenues so far in the year, adding that it was putting new projects on hold. Estimates in the London market suggest that sales volumes could have now slumped by 50%, compared to the 18% dip seen in April.
The group’s job losses will follow nearly 2,000 job cuts announced last week by rival firms Taylor Wimpey and Barratt Developments.
Housebuilders in the UK have been hit hard by the credit crunch as the mortgage drought has meant homebuyers have been unable to secure the finance they need, while property price falls have put people off buying a home.
The pessimism surrounding the industry in the UK has seen housebuilders’ share prices tumble to fractions of their worth a year ago. Persimmon lost its place in the FTSE 100 Index last month after its share price plummeted. The firm’s stock is worth around a fifth of its value a year ago.
Persimmon employs around 5,000 people and operates from 34 offices across the UK. It sold a total of 15,905 properties during 2007.
Analyst Rachel Waring at broker Panmure Gordon, who described Persimmon as the “bellwether” of the sector, said: “We believe conditions in the housing market have deteriorated further since the company last reported.”
Investors will also be looking for details about any writedown of its land bank to take account of falling house prices. Nationwide Building Society said prices had fallen 6.4% compared with the beginning of the year.
Taylor Wimpey, the UK’s largest housebuilder in terms of properties built, said it was writing down the value of its UK land bank and work-in-progress by £550m (€691m) – around 11% of its portfolio.
Ms Waring said she believed Persimmon was likely to write between £200m (€251m) and £300m (€377m) off during the next six months.