Persimmon cuts jobs but sees no big writedown

By Dan Lalor

LONDON (Reuters) - House builder Persimmon is cutting over a quarter of its workforce as first-half home sales fell 31 percent, but said there would not be a significant writedown in the value of its land holdings.

Chief Executive Mike Farley said any writedown at the time of the company's first-half results on August 21 would be in the tens of millions of pounds, not hundreds of millions.

He also said the company, the biggest house builder by market value and No.3 by homes built, would take a charge of 10 million pounds to 12 million for 1,100 job cuts that began in May and will leave the company with 3,000 staff.

Persimmon completed house sales plunged 31 percent year-on-year to 5,501 houses in the six months to end-June. The average selling price fell 4 percent to about 181,500 pounds in what Farley said was the most challenging period in the company's recent history.

House builders' share prices have collapsed this year, partly on fears of big writedowns on land bought at the peak of the housing market. The mood worsened on June 30 when indebted Taylor Wimpey announced a 660 million pounds writedown.

Persimmon shares, which peaked at 1,544 pence in January 2007, were down 3.5 percent at 220 pence at 9:10 a.m. in a falling market.

Persimmon, which previously announced plans to scale back development of new sites, forecast its underlying first-half operating margin fell to about 14 percent from 20.8 percent.

"Poorer market conditions have continued. The significantly reduced availability of mortgage funds and a reduction in consumer confidence is restricting the level of sales activity and the volume of total housing transactions across all markets in the UK," it said.