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Persimmon profit drops as focus on quality leads to delivery delays

Persimmon profit drops as focus on quality leads to delivery delays
FILE PHOTO: A sign is displayed at a Persimmon construction site in Dartford, southern Britain August 21, 2015. REUTERS/Neil Hall   -   Copyright  Neil Hall(Reuters)
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(Reuters) – Britain’s second largest housebuilder Persimmon <PSN.L> reported a fall in first-half profit on Tuesday as it spent on initiatives aimed at quashing a public row over complaints about the quality of its homes.

Confronted with criticism over the quality and fire safety of its homes, the FTSE 100 builder launched a review of its business practices in April and decided to push back the timing of handovers to ensure homes were checked more thoroughly.

That led to a 1.4% drop in profit to 509.3 million pounds for the six months ending June 30.

The company, which builds homes in more than 350 locations in the UK, said it spent 40% more compared to a year earlier to improve customer service. The higher spending would lead to about 15 million pounds more in annual customer care costs.

“We have continued to experience some pressure with respect to the cost and availability of certain materials in the supply chain as the output from the industry continues to expand”, Persimmon said, adding that it expects cost inflation to be around 4% for the full year.

Average selling prices of its homes in the first half rose to 216,942 pounds from 215,813 pounds a year earlier, while revenue fell 1.75 billion pounds from 1.84 billion pounds a year earlier.

(Reporting by Samantha Machado in Bengaluru; Editing by Arun Koyyur)

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