Persimmon warns on margins due to costs, affordability
By Frank Prenesti
Date: Wednesday 13 Aug 2025
(Sharecast News) - House builder Persimmon said it still expected to deliver between 11,000 and 11,500 completions for the full year despite higher costs and the prospect of tax rises in October's Budget which could inpose "affordability constraints".
The company on Tuesday said its private forward order book was up 11% to £1.25bn, while underlying pre-tax profits for the six months to June were also up 11% to £165m. It also sounded a note of caution about margin growth next year, which weighed on shares in the firm, sending them to their lowest level since April.
UK Finance Minister Rachel Reeves is under pressure to find a way to bridge a £40bn spending gap and is boxed in by a manifesto pledge not to increase personal taxes amid a slowing economy and persistently high inflation which has put pressure on household finances.
Matters have been exacerbated by US President Donald Trump's global tariff war, increased government debt payments and a damaging u-turn on plans to cut welfare spending.
"As we look ahead, the pace of margin progression will be impacted by diminishing embedded build cost inflation, on-going affordability constraints and increased industry-wide costs," the company said in a statement.
Higher sales and prices helped lift half-year revenues by 12% to £1.31bn. However statutory pre-tax profit was flat at £146.7m, reflecting the £15.2m fine Persimmon agreed to pay following a Competition and Markets Authority investigation earlier this summer into price collusion.
"Results from Persimmon suggest the UK housebuilding sector is not a total lemon, and at their current low ebb, these stocks might pique the interest of contrarian, value investors," said AJ Bell investment director Russ Mould.
"However under the bonnet things don't look quite so rosy, thanks to some rather chunky exceptional items which mean earnings per share is actually down by 10%. Seven housebuilders have agreed to pay £100m into affordable housing programmes following a CMA investigation into price collusion, and Persimmon's contribution adds up to a £15.2m hit to its income statement."
"The payments made by the seven housebuilders are proposed in exchange for the CMA dropping its investigation, and won't constitute any admission of wrongdoing. Then again, £100 million sounds like a lot of money to shell out just out of the goodness of your heart, funded by the largesse of shareholder funds."
"The CMA is yet to confirm whether it will except the proposal, but it sounds like a done deal. This will no doubt lead to some understandably calling this out as a whitewash which ultimately undermines the integrity of the market."
Reporting by Frank Prenesti
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