Persimmon: H1 beats, guidance unchanged

Persimmon’s half-year revenue rose 14% to £1.5bn, driven by a 4% rise in new home completions and 8% higher average prices. The private order book rose 11% to £1.3bn

Underlying pre-tax profit grew 11% to £165m, ahead of market expectations. This was helped by the revenue uplift and a tight grip on costs.

There was a free cash outflow of £132mn over the half and a net cash position of £109mn at the period end.

An interim dividend of 20p was announced, in line with the prior year.

For the full year 2025, completions are on track to rise to the 11,000-11,500 range and market forecasts point to pre-tax profit of £432mn, up 9%.

For 2026, completions are expected at c.12,000 units with “good profit growth”.

The shares fell 2.6% in early trading.

Our view

Persimmon kicked off 2025 on a strong note, with solid order book growth and good house price trends. But margin guidance for 2026 came in softer than hoped. That means profit forecasts are likely to come down a touch - explaining the market’s muted response to otherwise upbeat results.

More broadly, performance has improved after a tough period a couple of years ago, and revenue trends have been encouraging over the past 18 months. Since Persimmon’s houses are typically priced more than 20% below the newbuild national average, sales tend to be more resilient in times of uncertainty.

But while profits have improved, a few years of softer sales and higher costs mean the margin environment is still much tougher than it has been for most of the past decade.

Pressures are starting to ease, and top-line growth should offset low single-digit build cost inflation this year. The in-house materials businesses, which we see as a key differentiator, should help on this front, too. They give Persimmon quicker and cheaper access to key materials. When Persimmon can use its own bricks, tiles, and timber, it saves around £5,500 per plot.

Significant pent-up demand for homes in the UK remains unchanged. The new government is reforming the national planning framework to help remove some of the roadblocks for builders, and it is starting to have a positive impact. But it’ll likely be a while before these changes move the dial for housebuilders.

Persimmon’s substantial land bank is a key strength and should be a beneficiary of easier planning policies when they arrive. Given its low average selling prices and first-time-buyer bias, it would also be well-placed to benefit from any potential government support for homebuyers.

The balance sheet is still in good shape despite cash on hand being a decent clip lower than a couple of years ago. The dividend was rebased lower in 2022 to reflect the more difficult environment, a reminder that housebuilders are cyclical businesses, so performance tends to ebb and flow. But at current prices, the yield looks attractive - though never guaranteed.

With green shoots of a recovery emerging in the housing market, there’s scope for improving sentiment towards the sector. Persimmon’s valuation remains well below the long-run average, providing a potential opportunity for long-term investors. But economic headwinds could delay activity in the sector from ramping back up into full flow.

Environmental, social and governance (ESG) risk

Most housebuilders are relatively low risk in terms of ESG, particularly for those in Europe. However, there are some environmental risks to consider, from direct emissions to the impact of their buildings on the local ecology. The quality and safety of their buildings is also a key risk.

According to Sustainalytics, Persimmon’s management of ESG risk is strong.

The group collects and discloses scope 1, 2, and 3 emissions and has strong emission reduction plans in place. It has also committed to its homes being net zero carbon in use by 2030. However, there’s currently limited disclosure on what percentage of materials are recycled. Disclosures around product and service safety is also lacking.