PERSIMMON PLC, the parent company of Hampshire-based Persimmon Homes South Coast, has become the latest construction company to suffer from the effects of the rapid decline in house sales.

The company, which currently has developments under way at Blandford Forum, Shaftesbury and Verwood, saw its turnover fall by a third in the last six months.

During the period, the completion of 5,501 units (compared to 8,002 in 2007) at an average selling price of £181,485 (down on the 2007 figure of £189,255) generated pre-tax profits of £100.9 million (before exceptional items).

As a result the operating margin was 14.0 per cent, well down on the 20.8 per cent operating profit enjoyed 12 months ago.

The combination of lower volumes and reduced average selling price, partly as a consequence of an increasing proportion of affordable housing, produced a turnover of £998.4 million, which was a reduction of 34 per cent on the same period last year (£1,514 million).

The impact meant that underlying earnings per share decreased to 24.1p (2007: 65.5p), reflecting the deterioration in trading conditions.

Persimmon says that sales for the second half of 2008, are currently running at around £835 million compared to £1.35 billion at this time last year. This, when added to first half revenues, would represent over 90 per cent of expected turnover for 2008.

John White, Group chairman, said: "The demands on our staff throughout this period of significantly challenging market conditions and the need to restructure our business have been significant. We deeply regret that this restructuring has resulted in many loyal and committed staff and employees losing their jobs.

Andrew Golawski, managing director of Persimmon Homes South Coast added: "Despite the fact the housing market has hardened, the first half of our 2008 profit was broadly in line with budget.

"We don't however see any immediate sign of an upturn in the financial climate and are therefore carefully examining ways in which we can best optimise our future trading position while cutting costs wherever this is a practical possibility."