Persimmon: 2,000 jobs to go

Permalink: Persimmon: 2,000 jobs to go
by Kay Murchie

The housebuilding industry has delivered more bad news this morning after Persimmon confirmed it is to axe 1,100 full-time workers and 900 flexible workers, cutting its total workforce from 5,000 to 3,000.

Persimmon said that the reduction in staffing would save around £65 million per year, meaning it could cope efficiently with its downturn in business.

It brings the sector’s job losses total to 4,500 already this year.

Persimmon also said home completions had plummeted by 31% and revenue fell by 34% in the first half of this year.

In a trading statement, Persimmon said it is facing its most challenging period in its recent history and said the reduced availability of mortgage funds and a reduction in consumer confidence were to blame.

Last month, the group was relegated from the FTSE 100, the share index which contains the largest UK-listed companies.

Last week, Merrill Lynch and RBS both downgraded the sector after Taylor Wimpey failed to secure £500 million from shareholders in a bid to shore up its balance sheet.

The entire housebuilding industry has been suffering of late due to the credit crunch and housing slowdown.

Last week, Barratts announced plans to reduce its headcount by 1,000 as it battles with the property slowdown.

Rival house builder, Taylor Wimpey, recently confirmed it was closing 13 of its 39 offices across the UK.

Last month, Merrill Lynch warned that the housing market could face a repeat of the 1990s crash. It said there is growing evidence of consumers behaving in a manner similar to that seen in the early 1990s, in that concerns over job security and falling house prices are leading to a reluctance to make a house purchase.

Just 18 months ago, Persimmon’s shares were trading at a decade-high of £15.19, giving the housebuilder a market value of £3.5 billion. Today it is worth £473.6 million - 86.4% less.