Persimmon (LON:PSN) reported what management described as “excellent” 2025 results, with double-digit growth across volumes and profits as the homebuilder continued a recovery it said began in 2024. Executives emphasized that growth was being driven by “self-help” initiatives and disciplined investment in land, outlets, brands, manufacturing capacity, and build quality, while maintaining a “robust and well-supported balance sheet” through a period of ongoing market and geopolitical uncertainty.

Chief executive Dean Finch said Persimmon grew completions, average selling price (ASP), sales rate excluding bulk, returns, and profit year-over-year, and noted that both the forward order book and land bank increased. Underlying profit before tax (PBT) rose 13% to £446 million, while underlying EPS increased 9% to 100.78p. Completions grew 12% to 11,905, supported by higher outlets and a stronger sales rate.

→ Will the Super Mario Movie Make It Showtime for Nintendo Stock?

Chief financial officer Andrew Checkley added that housing revenue increased 16% to more than £3.3 billion, reflecting the combination of higher volumes and a 4% increase in blended ASP. Gross profit rose 13% to £656 million, though gross margin declined to 19.8% due to product mix—specifically a higher proportion of affordable housing and build-to-rent (BTR)—as well as the effect of “historical embedded inflation.”

Despite the lower gross margin, underlying operating profit increased 17% to £472 million, with operating margin improving 200 basis points to 14.3%, which management attributed to overhead control and efficiency gains. Return on capital employed increased 60 basis points to 11.7%.

→ Credo Technologies Hits Bottom: Now Is the Time to Buy

Persimmon delivered 9,830 private homes in 2025, up 8% year-over-year. The company completed 1,758 bulk units, up 21%, while noting that BTR reservations slowed in the fourth quarter, which it said would make further growth in 2026 “more difficult” and was reflected in the forward order book.

Management said pricing was robust, particularly in the north of England and Scotland. Private ASP increased 5% even with the rise in bulk sales, which executives said also achieved “robust” pricing due to a more strategic approach. The company highlighted its positioning at the “value end” of its markets, noting that Persimmon Homes’ average selling price remains below the national new-build average and that more than half of completions were below £300,000.

→ 3 Blue-Chip Stocks Built for a Rotating Market

On the brand mix, Checkley said open market sales grew in both the Persimmon and Charles Church brands, with Charles Church deliveries up 16% in 2025 as the group works toward a longer-term aim to “double it over time.” Partnerships output grew 31% to more than 2,000 units, representing 17% of total completions; management said most affordable delivery for 2026 was already signed.

During the Q&A, executives said they were not seeing a need to “discount hard” to drive sales, describing ASPs as “pretty robust” and indicating a narrowing of discounts. Persimmon also reported that 32% of private sales were to first-time buyers and said mortgage qualification rates had improved over the past year, supported by higher loan-to-value lending, though management characterized the improvement as “gradual” absent a stimulus such as Help to Buy.

Persimmon ended 2025 with 277 outlets, up 3%, and an owned and controlled land bank of nearly 85,000 plots, up 3%. The total forward order book was £1.8 billion, up 6%, with the private order book up 9%.

Executives repeatedly pointed to the company’s goal of reaching at least 300 outlets over the next couple of years. Finch said the group grew outlets “against industry decline” and planned to open more than 100 outlets during the year, stressing the importance of opening sites early enough in the year to capture the build season.

On land buying, management said activity had increased as inflation stabilized, though it noted that elevated build-cost inflation remains embedded in the portfolio from older sites and will continue to dampen margin progression until those sites roll off. Checkley said 78% of plots in the land bank have a site margin above 25% and the overall embedded site margin is 28%, slightly down year-over-year due to mix and timing of strategic sites. He also said around 75% of expected 2026 delivery and more than 50% of 2027 delivery would still be on sites encumbered by embedded inflation, with the effect beginning to reduce from 2027.

Finch provided examples of land opportunities the company pursued during the year and described improving access to land promoters and private landowners as Persimmon’s reputation and placemaking improved. He added that while planning reform is supportive, the company has not yet seen a “material improvement” on the ground and credited planning success to a self-help approach and local relationship-building.

Management said building safety remediation remains a priority but reported progress. Checkley said Persimmon was the first housebuilder to sign the new Scottish remediation contract and that, as of December 31, the company was on site or complete at 77% of known developments. The closing remediation provision was £226 million, £9 million lower year-over-year, after adding £40 million to the provision during the period including four new developments added to the known total. The company performed £61 million of work in 2025, bringing total work to date to around £180 million, and expects to spend close to £100 million in 2026, with most remaining spend over 2026 and 2027.

Persimmon generated £488 million of cash flow from operations, up 16%, and invested £208 million more in work in progress. The company ended the year with net cash of £117 million and reported adjusted gearing of about 14% after land creditors; Checkley said adjusted gearing could rise to around 20% by the end of 2026 as the company invests at what it views as the right point in the cycle.

To support investment, Persimmon announced increased banking facilities, including a two-year £250 million term loan and a £50 million increase in its revolving credit facility to £750 million. The company declared a final dividend of 40p, bringing the full-year dividend to 60p, in line with the prior year.

Finch said current trading had started positively. As of March 1, the forward order book remained up 6% to £1.8 billion and the private forward order book was up 9% to £1.25 billion. In the first nine weeks of the year, Persimmon sold an average of 199 houses per week, up 11% on 2025, with net sales per outlet per week of 0.73, up 9%. Excluding bulk, sales averaged 167 houses per week, up 6%, with a net sales rate of 0.61. Management said pricing was robust, with ASP up 5% overall and up 6% in the private forward order book, while incentives were running at around 5%.

Assuming stable conditions, Checkley said Persimmon expects 2026 completions of 12,000 to 12,500, ahead of previous guidance, with a similar first-half/second-half split to 2025. He said 2026 growth would be more dependent on open market sales than 2025 and therefore requires a stable market environment. On profitability, he said operating profit would be “towards the upper end of current expectations” if volume guidance is achieved, though financing costs are expected to rise due to investment and lower net cash.

Management also discussed potential impacts from the conflict in the Middle East, framing the primary near-term risk as changes in customer sentiment and the longer-term risk as increased build cost inflation. Finch said the company had taken steps to mitigate risk for 2026 through contracted build programs, the use of in-house manufacturing, and supplier preparedness such as hedging, alternative shipping routes, and higher stock levels.

Persimmon Plc, together with its subsidiaries, operates as a house builder in the United Kingdom. The company offers family housing under the Persimmon Homes brand name; housing under the Charles Church brand name; and social housing under the Westbury Partnerships brand name. It also provides broadband services under the FibreNest brand; and timber frame, insulated wall panels, and roof cassettes under the brand Space4. Further, it offers concrete bricks and roof tile. Persimmon Plc was founded in 1972 and is headquartered in York, the United Kingdom.

The article "Persimmon H2 Earnings Call Highlights" was originally published by MarketBeat.