Persimmon sales drop by a third with 1,100 jobs cut

Sales at Persimmon have fallen by a third in the first six months of this year and it has been forced to cut 1,100 jobs.

The embattled company said in a trading update to the City this morning that the half year to 30 June has been "the most challenging" in its recent history.

Total sales revenue fell to £1bn - down 34% compared to the same period a year ago.

Meanwhile it reported that margins were under "increasing pressure", falling to 14% for this first half of this year compared with 20.8% over the same period in 2007.

The company said that a restructuring process started in May has resulted in the loss of around 1,100 salaried staff, which will generate a cash saving of £45m a year, and an annualised overhead saving of more than £20m.

Total net debt at the firm still stands at £900m, which represents a gearing level of 39%. But the firm said that this was "comfortably" within its borrowing facilities of £1.39bn and that it was expected to fall further as cost-cutting measures continued and it spent less cash on land.

Purchase of land has slowed dramatically. It revealed that it currently owns or controls 76,000 plots but around 80% of these were bought before 2007. The firm said it did not "expect to announce any significant write down of our land values when we announce interim results in August".

Legal completions fell a total of 31% in the period - the equivalent of 5,501 properties at an average price of £181,500. The average selling price was £189,255 in the same period a year ago.