Taylor Wimpey’s full-year revenue rose 13% to £3.8bn. This was driven by UK completion growth of 6% to 10,614 new homes, and average selling prices rising 5% to £335,000.
Underlying operating profits grew at a slower pace of 1% to £421mn, due to higher operational costs.
Free cash flow fell from £162mn to £129mn. The net cash position fell by 39% to £343mn.
In 2026, total UK completions are expected to be in the 10,600-11,000 range. Underlying operating profits are expected to fall to around £400mn, reflecting softer pricing in the order book.
The total payout policy remains unchanged, but the mix has been tweaked to include a share buyback component. As a result, full-year dividends are down 20% to 7.62p per share, and a new £52mn share buyback programme has started.
The shares rose 3.1% in early trading.
Our view
Taylor Wimpey’s full-year results were largely in line with expectations, helped by higher sales volumes and rising house prices over 2025. But pricing looks set to weaken this year, and profits look set to fall as a result.
Unsurprisingly, momentum pulled back over the second half of 2025. Many buyers chose to hold off signing on the dotted line for a new home, waiting for more details about potential tax changes from the UK Budget back in November. With that cloud of uncertainty now cleared, Taylor Wimpey’s sales rates are beginning to pick up again.
With a pressing need for new homes in the UK, the long-term demand outlook remains favourable. The issue for 2026 lies in a downward trend in selling prices on the order book. Alongside buyer incentives running at around 6% of the selling price, margins are getting squeezed, and full-year profits now look set to fall below last year’s level.
On the flip side, Taylor Wimpey’s significant land bank leaves it relatively well placed to react if demand does pick up. That’s not the full picture though. The landbank’s value can’t be unlocked without the relevant planning permissions. Recent changes to planning permissions have been helpful, but the sector is calling on the UK government to do more to help unlock supply further.
Affordability remains a key issue for buyers to wrestle with, especially in the South, and that’s largely out of Taylor Wimpey’s control. While real wage growth and a competitive mortgage market are helpful, the pace of rate cuts looks set to slow this year. As a result, we think the scope for positive surprises is limited in the near term, and Taylor Wimpey will have to manage its workflows carefully.
The balance sheet remains in good shape, arguably among the strongest in the sector. Given the current valuation weakness, we were pleased to see the group’s payout policy change to include a buyback component. So while the payout ratio remains the same, the dividend yield is set to drop from the high-single digit levels seen in recent times. As always, shareholder returns can go down as well as up.
Taylor Wimpey is well-positioned for the long term, with a strong balance sheet and a solid land pipeline. At current levels, the valuation could offer some long-term upside. But flagging demand means profits are set to come under pressure in the near term, so it’ll likely be 2027 before performance picks up. And of course, there are no guarantees.
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, Taylor Wimpey’s management of ESG risk is strong.
The group has a strong greenhouse gas reduction programme in place and reports on scope 1, 2 & 3 emissions. There are clear deadlines in place and a renewable energy programme has also been implemented. While the group uses recycled materials, there’s no disclosure of the percentage used.
Taylor Wimpey key facts
All ratios are sourced from LSEG Datastream, based on previous day’s closing values. Please remember yields are variable and not a reliable indicator of future income. Keep in mind key figures shouldn’t be looked at on their own – it’s important to understand the big picture.
This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by LSEG. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.
This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment.