By Scott Kanowsky
Investing.com -- Persimmon (LON: PSN ) has ditched its dividend payout program as it looks to take a more conservative approach to spending due to headwinds facing the U.K. housing market.
The British homebuilder said on Tuesday that it will conclude 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 retain sufficient capital by "operat[ing] prudently."
The decision comes as Persimmon warned that Britain's real estate market is under strain from rising interest rates and economic fears weighing on mortgage lending and customer demand.
This was reflected in Persimmon's average net private weekly sales rate for July 1 to November 7 period, which dropped to 0.60 from 0.78 in the same timeframe last year. Forward sales reserved beyond 2022 also fell year-on-year.
Meanwhile, Persimmon flagged that it had raised the amount of cash it had set aside to pay for work to remove cladding in its high-rise buildings to £350 million from £75 million.
The FTSE 100 firm added that it is still too early for it to provide specific guidance for 2023, but said that it expects fewer legal completions and a deterioration in average selling prices to have "an impact" on margins next year.
Shares in the company slumped by more than 6% on Tuesday.
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