By Scott Kanowski
Investing.com — Persimmon (LON:PSN) has scrapped its dividend payout program as it seeks to take a more cautious approach to spending amid headwinds facing the UK property market.
The British homebuilder said on Tuesday it would wrap up its current capital allocation program, citing “increased uncertainty in the political and macro-economic environment”. The company will replace it with a new policy that aims to maintain sufficient capital by “operating[ing] cautiously.”
The decision comes as Persimmon warned that the UK property market is under pressure from the rise interest rate and economic fears weighing on mortgage lending and customer demand.
This was reflected in Persimmon’s average weekly net sell rate for the period from July 1 to November 7, which fell to 0.60 from 0.78 in the same period last year. Forward sales booked beyond 2022 were also down year-on-year.
Meanwhile, Persimmon reported that it had increased the amount of money it had set aside to pay for work to remove the cladding from its high-rise buildings to £350million from £75million .
The FTSE 100 company added that it was still too early to provide specific guidance for 2023, but said it expected fewer legal completions and a deterioration in average selling prices to have “a impact” on margins next year.
Shares of the company fell more than 6% on Tuesday.