Persimmon jobs cull as house sales slide
Persimmon will heap more misery on the beleaguered housebuilding sector tomorrow when it cuts 1000 jobs and reports a vicious slump in sales.
Building collapse: A grim trading statement from Farley will say a fifth of the workforce is going
Chief executive Mike Farley will confirm he has been forced to wield the axe in what is likely to be a grim trading update to the City. The cull, a fifth of the 5000-strong staff, would add to the gloom for the industry after Barratt Developments last week slashed 1000 jobs and Taylor Wimpey cut 900.
Housebuilders are reeling from the worst downturn in the property market for 30 years as mortgage lending and sales dry up and prices fall. The value of Britain's seven biggest builders listed on the stock market has crashed nearly 90% in the past 18 months.
Royal Bank of Scotland today added to the pain with a wave downgrades. 'A severe volume and price correction now looks largely inevitable for the UK housebuilders,' it said as it advised clients to sell shares in Persimmon, Taylor Wimpey and Barratt.
It now reckons Persimmon shares, which fell 7½p to 228½p today, should be worth just 184p. It cut its target on Taylor Wimpey, unchanged at 31¾p, to 19p and said Barratt, up ¾p at 43p, will fall as low as 30p.
Persimmon launched a consultation with staff at the end of May, warning that 'several hundred' jobs were at risk. It will confirm the number at around 1000 tomorrow. The firm, which owns housebuilding brand Charles Church and bought Westbury for £643m in 2006, last updated the market in April when it said sales were down 24%. Farley will tomorrow admit things have got even worse.
Barratt is likely to reveal a sales slump on Thursday, but is expected to try to reassure investors over its £1.8bn debt mountain by providing details of a deal with its banks.
Dresdner Kleinwort analyst Alastair Stewart last week warned there was 'a very real danger' Barratt and Taylor Wimpey could collapse. It came after Taylor Wimpey's shareholders rejected a £500m plea for help.
The crisis in the housing market has seen hundreds of jobs cut at estate agents, with experts warning up to 15,000 face the chop. Construction firm Galliford Try has shed 260 staff and Kier Residential, the private housing division of Kier Group, is closing three offices with the loss of 300 jobs.
Most watched Money videos
- BMW meets Swarovski and releases BMW i7 Crystal Headlights Iconic Glow
- Volvo's Polestar releases new innovative 4 digital rearview mirror
- Skoda reveals Skoda Epiq as part of an all-electric car portfolio
- How to invest for income and growth: SAINTS' James Dow
- Tesla unveils new Model 3 Performance - it's the fastest ever!
- Mercedes has finally unveiled its new electric G-Class
- 'Now even better': Nissan Qashqai gets a facelift for 2024 version
- 2025 Aston Martin DBX707: More luxury but comes with a higher price
- Land Rover unveil newest all-electric Range Rover SUV
- Blue Whale fund manager on the best of the Magnificent 7
- Mini Cooper SE: The British icon gets an all-electric makeover
- Mini celebrates the release of brand new all-electric car Mini Aceman
- Snoop Dogg cannabis firm to ditch London after losing 97%...
- BUSINESS LIVE: BoE base rate decision; ITV eyes ad market...
- Ford confirms it will cull another of its best-selling...
- Hedge fund tycoon's £34m silver salvage claim sunk at the...
- Watches of Switzerland buys Italy's Roberto Coin Inc for...
- ITV hit by Hollywood strikes as it pins hopes on Euros...
- Avon Protection handed £38m gas mask contract by MoD
- Controversial Brewdog founder James Watt steps downs
- Drivers abandon Direct Line after insurance premium hikes
- Why we need more than a British Isa to move the dial on...
- Mortgage rates are climbing again - should we be worried?...
- Used car sales hit a five-year high as fresh supply of...
- BAE Systems tools-up for growth as Britain plots defence...
- We do need to resolve inequality admits £8m-a-year...
- TSB to close one in six branches: More than 6,000 shut by...
- Oil industry engineer Wood Group rejects £1.4bn Dubai...
- Millions kept in the dark over City watchdog's mystery...
- Spring property bounce is a damp squib - Rics estate...