February 27, 2020 / 7:57 AM / a month ago

UPDATE 2-Persimmon CEO steps down, profit falls after Help-to-Buy row

* CEO Jenkinson announces departure after a year in charge

* Annual profit dips to 1.04 bln pounds

* Builder needs to “continue evolution” after complaints

* Shares fall more than 6% (Adds details on results, CEO, background)

By Samantha Machado

Feb 27 (Reuters) - Persimmon CEO David Jenkinson announced plans to step down on Thursday just a year after he was appointed to rebuild the reputation of Britain’s second-biggest housebuilder following criticism of poor construction and big payouts to executives.

Shares in the company fell as much as 6.4% after it said Jenkinson would leave in due course. It also reported a 4.6% fall in 2019 pretax profit to 1.04 billion pounds ($1.35 billion), in line with expectations.

It sold 15,855 new homes in 2019, compared with 16,449 in 2018, when its use of government “Help to Buy” subsidies was marred by customer complaints over the quality of the houses and a $100 million bonus paid to previous CEO Jeff Fairburn.

Fairburn resigned in late 2018 and Persimmon sought to steady the ship by ordering an external review and appointing long-term company insider Jenkinson last February.

That review, published in December, was heavily critical of Persimmon’s business practices, prompting the company to commit to improvements.

Chairman Roger Devlin said Jenkinson had “played a critical role in the development of a new Persimmon” and it would seek a replacement who “continued the evolution of the business”.

Credit Suisse described Jenkinson’s departure as “somewhat surprising.”

Persimmon shares, which had risen around 20% this year, were down 4.7% to 2,932 pence at 1040 GMT, in a weak UK stock market.

Separately, Vistry Group, formerly known as Bovis Homes Group, beat market estimates with a record rise in annual profit as it sold more homes and said it had seen increased levels of consumer demand in the new year.

Vistry, which recently bought fellow builder Galliford Try’s residential arm, said pretax profit rose 12% to 188.2 million pounds.

Persimmon has said delays in rolling out homes, while it carries out additional quality checks, have dented profits.

“We were ... engaged on a broad range of customer service and quality improvement initiatives throughout the year,” Jenkinson said. “We are confident these initiatives will add to our momentum this year.”

$1 = 0.7696 pounds Reporting by Samantha Machado and Noor Zainab Hussain in Bengaluru; Editing by Sriraj Kalluvila and Mark Potter

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