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Persimmon profits crash

Profits at house builder Persimmon were slashed 86 per cent in the six months to June 2008 as it continues to feel the effect of the nosediving housing market.

The firm today revealed that pre-tax profits dropped to £36.9 million from £281.1 million last time.

Exceptional items totalled £64 million for the first half with £15 million spent on restructuring costs following the news earlier this summer of three office closures, 1,100 office redundancies and 900 site based job losses. The firm expects annual cash savings of around £45 million starting from September.

Challenging market conditions and ‘weakness in selling prices’ has resulted in a £40 million write-down of its owned land. The number of new homes sold dipped to 5,501 from 8,002 the previous year.

Persimmon has withdrawn from potential land purchases which has lead to a further £9 million write-off to cover professional costs.

The firm said: “The uncertainties surrounding the general financial markets and mortgage availability will be the defining factors in the return to a more normal housing market.

“Until we see an improvement in respect of these factors it is difficult to predict the short term future with confidence.”

And the firm admitted it had no idea when things would get better saying it was in a strong position “whenever the market improves”.