Persimmon will see staff numbers fall by 700 this year amid an ongoing recruitment freeze, as the firm looks to manage its finances.
The housebuilder has reported a fall in completions of 37% as the housing sector continues to struggle.
The company, in a trading update for the three months to 6 November, said it completed 1,439 homes in the period, down on the 2,270 for the corresponding period last year, due to a “slower sales environment”.
Persimmon said: “We continue to operate from a lean fixed cost base and pursue a highly disciplined approach to Work In Progress management. As a consequence, build rates in the third quarter were c.30% lower year-on-year reflecting the slower sales environment.
“Disciplined management of costs remains a key focus for the Group and in addition to careful spend controls, the hiring freeze we have in place means that headcount is likely to reduce by c.700 during 2023.”
Persimmon is continuing to negotiate with subcontractors over price reductions.
It said: “We have taken a proactive approach with suppliers and subcontractors to secure price reductions on both materials and labour over the past few months.
“In line with prior commentary, build cost inflation has been more stubborn than expected at the start of the year and we anticipate the annualised impact of build cost inflation through the P&L for 2023 will be c.8-9%. However, build costs have moderated since the half year which will benefit completions in 2024.”
Dean Finch, group chief executive, added: “Trading in the period was in line with expectations and pricing was broadly stable. We are on track to deliver around 9,500 quality new homes in 2023 with operating profit in line with expectations and at an operating margin similar to the first half.
“While the near term is likely to remain challenging and we remain disciplined on costs, we continue to position the business for growth when the market recovers, as demonstrated by our further progress on planning in the period. The Group’s national network of outlets providing a high-quality product at a range of attractive prices is a crucial strength in this market.”
Reflecting on Persimmon’s latest trading update, Anthony Codling, former City analyst and now chief executive of Twindig, said: “Persimmon is performing well in the face of housing market headwinds and is on track to deliver full year results in-line with expectations. The group is doing a good job managing prices and incentive levels, with incentive levels lower than we had anticipated. However, those headwinds are likely to remain in 2024. Volumes may increase next year as more outlets are opened, but pricing and ongoing build cost inflation are likely to keep margins flat. Over the tone of today’s trading statement as neutral, which in this market we see as a good result.”
