Earnings call transcript: Kaufman & Broad’s Q3 2025 shows revenue growth

Kaufman & Broad (K&B) reported its Q3 2025 earnings, revealing a 6% year-over-year increase in revenue to €744.7 million. The company highlighted its strong performance in the commercial business segment, which contributed €133.8 million in revenue, marking a €43 million increase from the prior year. The company’s stock price rose by 2.72% following the announcement, reflecting investor confidence in K&B’s growth strategy and market positioning.

Key Takeaways

• Revenue increased by 6% year-over-year, reaching €744.7 million.
• Commercial business revenue surged by €43 million.
• The stock price rose by 2.72% following the earnings release.
• The company reported a net income increase to €33.3 million.
• K&B’s housing orders grew by 12%, outpacing the market’s 10% decline.

Company Performance

Kaufman & Broad demonstrated resilience in a contracting French housing market, achieving a 6% revenue increase year-over-year. The company outperformed market peers with a 12% growth in housing orders, despite a 10% market decline. Strategic focus on fast-selling and market-aligned housing products contributed to this success.

Financial Highlights

• Revenue: €744.7 million, up 6% year-over-year
• Housing Revenue: Approximately €600 million, flat year-over-year
• Commercial Business Revenue: €133.8 million, up €43 million
• Gross Margin: €149.2 million, representing a 20% margin
• Net Income: €33.3 million, up from €31.1 million in 2024

Outlook & Guidance

Kaufman & Broad projects a full-year revenue growth of approximately 5% with EBIT expected to be between 7.5% and 8% of revenue. The company remains cautious about 2026 due to potential political uncertainties and is monitoring the impact of upcoming municipal elections on project starts.

Executive Commentary

CEO Nordin Asjemi emphasized the importance of maintaining a healthy position in a shrinking market, stating, "We’d rather stick to this position to be a healthy company on a market that’s shrinking." He also highlighted the company’s agility, noting, "We go fast, we move fast, we adapt fast."

Risks and Challenges

• Political instability may impact consumer confidence and project starts.
• The French housing market is experiencing significant contraction, with a 47% decrease in housing permits over 17 years.
• Potential impacts from upcoming municipal elections could affect new project launches.
• The company must continue to adapt to market conditions to maintain its competitive advantage.

Kaufman & Broad’s Q3 2025 earnings reflect its strategic positioning and adaptability in a challenging market environment. With a strong balance sheet and a focus on high-quality growth opportunities, the company is well-positioned to navigate upcoming challenges.

Full transcript - Kaufman Et Broad (KOF) Q3 2025:

Nordin Asjemi, Chairman and CEO, Kaufman & Broad: Good morning. Welcome to the Kaufman & Broad first nine months results and outlook. Before we start, we will have a Q&A at the end of the presentation. First, we’ll take the oral questions and then the questions in writing, which means that you can ask your questions if you click on the question tab. Now we’ll listen to Nordin Asjemi, Chairman and CEO, and then Bruno Koch, the CFO, who will talk you through the results and the outlook for Kaufman & Broad. The floor is yours. Thank you. Good morning. Thank you for being with us this morning for the nine-month results. That is from the 1st of December 2024 till the 30th of September 2025. That’s our year. Let’s start with slide number one. Those are the usual indicators that we’ve been using for a couple of years.

Now you may see how the mid-term indicators have evolved and the short-term ones as well. First, the housing land portfolio, which is up 13.6%. Now, apart from the absolute % increase, what’s important is that we’ve been cleaning up the portfolio and the result is that we’re growing again. The portfolio is growing and we pick quality projects that are fewer and weaker competitors. If we look at housing orders, there’s a significant increase if you look at volumes and to a lesser extent, we have an increase as well in values. Here again, these are the first nine months. Who knows what the performance will look like at the end of the year?

When we analyze the housing orders, we will see that on the backdrop of a market that has been going through a lot of pressure, we’re in a position to take quality projects for which we can find clients for the first-time buyers, that is. The housing take-up rate is up at 5.1 months. Nothing to be worried about. On the contrary, I say that this is good. We are beefing up our commercial offer and our sales offer. If you look at our results, we’re outperforming our peers. 5.1 months is the time it would take us to sell all that we have in the portfolio if we couldn’t sell new housing projects and units. It’s exceptional. The total backlog, and as you can see, we have corporate property and housing.

For housing, the numbers are stable and we have a decrease due to the fact that the Ostia Lease has increased and therefore the corporate backlog has decreased because we’ve continued the works in Ostia Lease. On the following page, we have more information about the housing market. Now, we’ve been showing you these trends for years. We hope that at the local level and national level, the political decision makers will change their policies in mind. Now we’ve presented things differently. Look at the decrease in the number of housing permits that have started: 47% over the past 17 years. On the contrary, the population has grown: plus 4 million over the same period of time. That’s for metropolitan France or mainland France. These are the trends. We’ve been talking about these trends for years. We know that there’s a social crisis which is simmering.

Nobody’s paying attention to this crisis or the answers are not appropriate. It’s not by insulating housing that we’re going to create more housing units. We’re not even certain that we’re going to improve the thermal properties of such insulated housing units. Unfortunately, look at this. This is another way of saying the same thing. Look at the historic drop of housing units that have started. Of course, we were hit by the 2008 crisis, the subprime crisis. Look at the level that we’ve reached. The same trough, the same level without any other external phenomena that have hit the group, that have provoked this drop. If we look at authorized housing and orders, the situation is even worse. It started well before the effect of the French municipal elections, the local elections. On page seven, we have a reminder of the main parameters.

The important things that are the underlying elements that might feed into the dynamics of the market or perhaps slow it down are first interest rates and how they change. They’re stable over the long term, 3.25% or 3.50% over 20 years for the first-time buyers or second-time buyers as well. The trends as far as interest rates are concerned are rather stable. Later on, they might be impacted by sovereign rates. The PTZ, the 0% loans could be used more, but we’re here to help our customers. This is something good. It’s positive for the first-time buyers. We have the social landlords. The social landlords, I wouldn’t say they’re fragile. That’s probably not the right word in French on the slide, but they have to renovate the buildings for thermal purposes.

When they’re doing this, it means that they have less money and therefore they cannot really build new housing units or buy them or acquire them. They too have to go through rates that are going up and down. The housing business. Where do we stand on that market? Let’s try and understand what’s happening. First, what we’ve sold over the period, that’s from January to August 2024. Those are the data sets that are available that the government is giving us. That Adequation, the firm we work with, is analyzing. Minus 6% over the period. If you look at Kaufman & Broad and our sales, they’re up 59%. Commercial offer down 10%. That’s the market trend. For us, we’re up 37%.

The orders over the period, here again, it’s not the nine months, but anyway, the market players are on a market that is going down 10%, whereas we’re going up 12%. There’s a difference between us and the other market players, and that’s due to our quite special positioning, as you know. There’s one thing that we do well: our balance sheet. We reassure the landlords, the owners, the political elected representatives. They understand that it’s good to work with a developer who walks the talk and delivers on the promises. The market is decreasing sharply, yet we are a company that’s growing on the market. To be a bit selfish, I’d say we’d rather stick to this position to be a healthy company on a market that’s shrinking rather than being one of the players on a market that’s growing fast.

We would have to take all types of projects that would be poor projects. We were saying this when the market was growing. We stick to what we say and we’re quite consistent with the message that we’ve sent out for the past 10 years. The take-up period is five months. The market is at nine months, I think. These are the figures from the ministry and the data from Adequation, the firm we work with. The dynamics of the market are really good, and that means that the WCR we need is really low. If we look at volumes and values, page 11, that’s for housing orders. Look at this. There’s a continual growth for the first-time buyers and second-time buyers. As far as investors are concerned, when we had the Pinel scheme, we had 15%. Today we’re at 12%. The decrease is not that massive.

We still have investors, but they don’t use these tax incentives. For the first-time buyers, they’ve gone from 18% to 24%. What’s interesting is that if we look at the values, then we have more or less half of those orders, housing orders, that are for individual buyers. We’d like this percentage to increase in the future. Let’s have a look at the portfolio. It’s going up. First time for a long while. When there’s a parameter that changes, the rate’s going up or the health crisis, etc., we have, as you know, to clean up our portfolio, which is what we’ve done. For the very first time, I must say that now that we’ve offset or we have stable parameters, we’re growing, which means that now we can have good, frank discussions with the owners of the land.

They understand that our proposal is perhaps not as appealing as that of competitors, but at least they know that we’ll deliver. People no longer believe in miracles nowadays. The market several years ago was totally mad. On the following page, we have information about the backlog, which is rather stable. We hope that this will change in the future. Next page, please. Commercial property. €134 million. That’s total revenue. That’s because we’ve progressed on the Ostia Lease worksite. There are a number of projects doing nicely. We’ve already talked about this one, but we will tell you more about this when the final contract is signed. That’s for the EDF regional office in the town of Marseille in the south of France.

We hope we’ll be able to sign the contract once and for all so that we can start construction work and the Ostia Lease project, which is moving swiftly. I’d say that we no longer have the technical risks that hovered on us that had been identified connected to the underground tunnel and the overhead metro line. We never know what might happen on the worksite, but those tricky points are over. Now I’ll hand over to Bruno. Bruno will talk you through our financial performance, sorry, and then we’ll answer your questions, Bruno and I, at the end of the presentation. Thank you. Thank you, Nordin. Good morning, one and all. We’ll have a look at the income statement. We’ll start with revenue for these nine months. Up a bit more than 6% over the period. A bit better than the nine-month guidance. €744.7 million.

Now, if we look at the different lines, we have housing. Housing is almost flat. €600 million, not even this, with an interval of 12 months. Growth is due to commercial business and mainly Ostia Lease with revenues at €133.8 million. Therefore, a change of plus €43 million. Then gross margin, operating profit. That’s the difference between what we sell and direct costs. That is the land and the cost of construction work. To measure the performance of our operations and the quality of our operations, we reach €149.2 million. Therefore, up from last year, we were at €146.2 million at the same period last year. The margin that we have is at 20%. Therefore, a slight decrease from last year’s level. There are reasons for that. The mix is a bit different, as we were saying earlier on.

The housing revenue is flat, whereas the gross margin contribution for housing is going up. Therefore, all things being equal, the gross margin for the housing activity is higher than the one we had last year. However, 100% of our growth coming from commercial has a gross margin in rates, which is a bit lower than last year’s. Quite satisfactory, I’d say. Even though at first glance, we could derive from this that our performance, our general performance is not as good as before. We have the current operating income at €56.8 million and therefore an increase of a bit more than 6% in line with the revenue. This is due to the fact that we control the current operating expenses, €92.4 million. That is 12.4% of the revenue versus 13.2% the year before.

The operating margin rate is at 7.6%, almost stable for the first three quarters of the year in line with our guidance. The guidance between 7.5% and 8% for the year is what we expect. The operating margin is quite in keeping with the levels we had the years before. Good. The next line is the cost of net financial debt, €7.9 million. Therefore, a decrease of almost €5 million versus the previous year. The reason is that we no longer have a gross debt because we’ve reimbursed the 100 residual millions that we have for Euro PP at the end of May 2025. Net income is at €33.3 million. It was €31.1 million in 2024. Therefore, our growth is a bit higher than revenue and therefore rather satisfactory, which means that we control the parameters below the line called operating margin. The balance sheet will start with the WCR.

WCR is strongly negative, almost minus €300 million in line with what we saw at the end of August 2024 and end of November 2024. The reason is that the Ostia Lease project is developing quite nicely. As we always say, we will pay at delivery in 2027. We will pay most of the land, which to the tune of more or less €200 million today. We have a good control. WCR for housing is not, as we were saying before, we sell our units quickly. It doesn’t weigh on the WCR. All things are controlled and all things being equal for housing, the WCR would be below 10%. The balance sheet equity to €120.2 million. That’s shareholders’ equity. That’s satisfactory again. We have a payment of dividends €43 million at the end of May 2025. That’s been booked.

Net cash, €395 million more or less, excluding IFRS 16 and neo-resi debts or liabilities, €397 million at the end of 2024. Quite stable. As we said in the guidance, and we’d like to repeat what we said at the end of the year, we’ll have a cash position which will be high at the end of the year. Financial structure, we no longer have long-term debts and liabilities. If you look at long-term debts, what we have is solely the IFRS debt. That is, in fact, rent for the Kaufman & Broad premises, €54.2 million. This will steadily decrease over time. On the other hand, we have cash €398.3 million. That’s for cash and cash equivalents at the end of 2025.

Bruno Koch, CFO, Kaufman & Broad: As a reminder, Fitch Ratings has confirmed its BBB- rating with a stable outlook for the third year in a row, which really stresses how sound our financial structure is in the mid-term and also in the long term. Now, regarding the guidance, we’re going to repeat our guidance for the entire year. Revenue up +5% approximately, EBIT between 7.5% and 8% of the revenue. Net cash position quite significant also. That’s for the first nine months of the year. I will now hand over the floor back to you for any questions you might have. Thank you so much. If you have questions, please dial star one on your phone. First question about Omae Mi, CIC. Good morning. I have two questions. First, regarding French politics and the impact on your business. How do you steer your business? What about your debt? Now you have no debt.

Are you going to focus on any specific growth in Arena? Any specific projects in mind? Thank you for asking the question. Obviously, there is some political instability, some tax uncertainties in France right now. This can have two kinds of impacts. First, our clients might not be confident and they might delay their decision to buy or invest into real estate because people need to have any idea of the future before they do so. During the past quarter, we’ve been launching the marketing for 200 housing units and seeing very good results so far. This is in the area surrounding Paris. In an area called the Belt Three Borders, at the heart of the borders between France, Germany, and Switzerland, next to Novartis, we’re also seeing very strong performance. We’re also seeing a strong performance in Annecy and other places.

I think that individuals are still confident enough in buying our products. There is also an increased interest rate. Our clients have to borrow money, be it individuals or institutions. Interest rates for now are still more or less in line with the price of the housing units. What I mean by this is that when people have to pay back their loans, the monthly payments are similar to what they would pay for if they were renting. They are protected because of the euro, thanks to the euro. Otherwise, interest rates would have skyrocketed, which was the case during a previous crisis. With the euro, interest rates are growing slowly in a more or less controlled manner. We’re not in a crisis yet. How can you prepare for an eventual or possible crisis, sorry? As always, we want to market our products fast.

The faster you sell, the fewer units remain on the market and might have to be sold at a lower price if the market conditions have changed. When units are sold at a slow pace and if they’ve been designed when the PNL scheme was still there, the prices were different back then. In our case, no, we sell fast, so we don’t really depend so much on such a political decision. Our products are in line with the purchasing power of our customers because of those short timelines. The cost for our clients will remain the same and we’ll have to clean up our portfolio if need be, no land, etc. This is how we adapt to a changing market.

We go fast, we move fast, we adapt fast in order not to be negatively impacted by any political decisions because we would have a housing stock that would no longer be in line with the current market situation. Now, regarding external growth, we’re still looking out for opportunities. We’ve been envisaging many options, but they were low-quality projects. What I mean by this is that those projects were about developers that had made all sorts of promises with the land or property prices that were much too high compared with the actual quality of the land and the market environment. So far, we haven’t really seen anything that was worth it. We’re also looking at buying project portfolios with building permits. Quite often, we have to work on those building permits again because they are no longer in line with our customers’ needs.

For now, we don’t have any magic wand. The market environment is very tough and it’s difficult to correct the trajectory if the project hasn’t been designed properly in the first place. We haven’t really found anything worth much interest so far now. To answer your questions, also, in order to be prepared for any changes, we have to work on our balance sheet, which is what we are doing. Thank you. Next question. Emmanuel Parrot, Gilbert Dupont. Mr. Parrot? I think you’re muted. Sorry, apologies. Can you hear me now? Yes, we can hear you now. Apologies, my phone was muted. Good morning. I have two or three questions. Let me start with the first question. With the recent commercial launches that you have mentioned that seem to be doing well, do you expect any comparable housing order trend in the fourth quarter?

Something that would be similar to what you had during the first three quarters of the year. Now that you’ve paid back the debt, could you talk about the landing of the financial profit? Could you talk about the impact of IFRS 16 over one year and also the net profit from your cash investments? Now, also regarding 2026, I know we are not in 2026 yet, but you have a backlog that provides us with good visibility with regards to the recognition of revenue. Do you think that I’m referring to housing units. Do you think that the performance could improve in 2026 compared with 2025? Maybe it’s too early to answer that question, but I’m still asking it. Thank you for asking this question. I will answer question number one and number three at the same time.

Regarding housing orders over the upcoming three months, it would be difficult to say that we are going to remain in a similar situation and keep the same growth dynamics because many things could happen over three months. We’ve already mentioned this when we answered the previous question. Let me give you an example. If the government, I don’t think this will happen, but let’s imagine that the government made a promise and this has already happened in the past. If they announced a quite advanced tax incentive scheme starting January 2026, then people would stop buying our units during the fourth quarter. There is a lot of political instability right now and it’s very difficult to envisage what might happen in three months. Over the long run, and the longer the period, the easier I would say it is to have any idea about the future.

Now regarding 2026, we first need to prepare the financial results for 2025. This will be presented in January 2026. Then we can present you with a forecast and outlook for 2026, but it’s a bit too early on. Now, regarding financial costs, €5.9 million, I don’t know, excluding IFRS. In fact, those are the €50 million rents. Then you have financial costs or expenses for the participant payment of Ostia Lease. We would have a net financial profit. Our cash is probably €400 million, 2%, and it’s easy to do the math. Excluding IFRS, those would be opposite financial profits. Let me remind you that if you want to ask a question, you need to dial star one on your phone. Next question from Marilyn Fond from Steen. Good morning. Can you hear me well? Yes, good morning. I have two questions.

I’d like to talk about the decrease in revenue in housing units. During the third quarter, minus seven during the third quarter. What happened since Q1? Is this associated with what happened in August and the progress achieved in the project? Was this because the revenue recognition is not linear? I also have a question regarding the housing order mix with first-time buyers or second-time buyers becoming more and more numerous. Is this going to impact the way you design your projects in the future? To answer the first question, the third quarter is not really significant. It cannot really tell about any long-lasting trends simply because we have this construction work and things are not necessarily linear. Some things have to be postponed. There is no conclusion to be drawn from this. Things should show, we should have a stable figure for the entire.

The gross margin rate over 12 months is improving. This means that if some projects are being marketed and contribute to the revenue and if the margin is higher, then we might end up with a smaller proportion of block sales and a higher proportion of sales to individuals. This means that things will improve in 2026. What you have to have in mind is that there is some inertia. You have some housing orders that are being made right now that are going to impact our revenues over three years, more or less, depending on how fast our projects move or progress. We tend to be cautious by nature and we tend to provide you with the good news once we’re certain that they’re actually good news. Thank you. Next question. Christophe Charpu, author. Good morning. I hope you can hear me well.

In line with Marilyn’s question regarding the decrease in revenues in Q3, I understood the explanation. If we think about 2026, there will be municipal elections in March. Could this also impact the revenue recognition negatively because some municipalities might decide to delay new project starts, for example? Yes. Good morning. This could indeed impact our revenue because, as you know, some of our revenues are linked to the progress made in some of our projects. Municipalities have no impact on it or very little impact. This had actually really never really happened and you really would need a serious problem to see this happen. There is a difference between what we want to do and what they want us to do. They might ask us to stop advertising for a specific development program. This has already happened.

They told us, "No, you have the building permit, but you’re not allowed to start selling your units before the municipal elections." We’ll know about this soon enough because some of our programs will impact our business in the coming year. Some elected officials have already come forward asking about those kinds of things. There’s another aspect. When we buy property, especially in the greater Paris area because the cost of property is very high, you might recognize 15% or 20% of this in your revenue the day you purchase the land. If they ask us to postpone the marketing of our projects or to postpone the acquisition of property, especially if it’s municipal property, this obviously could have an impact. We will know about this in January 2026. We’ll have more visibility. I have an additional question, if I may. I know the property portfolio is going up again.

Could you also comment on the price of land compared with last year? Is it slightly down? Is it going up again? Is it stable? Is this a significant parameter with the increase in your portfolio? The answer is yes, because when we assess our portfolio, we have to bear in mind that it is associated with two things that we do. First, we’ve given up some of the projects in our portfolio because the mayor has told us that they do not want us to build a housing unit in a specific location or they ask us to buy a specific type of housing unit that does not make sense from an academic point of view. The building permits have to comply with the city planning documents from the city. Quite often, mayors ask us to build fewer or more housing units.

We prepare a project and then the mayor says, "No, the building is too high. I want fewer units. I want a smaller building." This means that we end up cleaning up our portfolio because they are no longer relevant to us. We really need to think about future business before we file the building permit. By the time we get the building permit, costs have gone up. We need to have additional negotiations with the owner, and the owner might decide not to bring the price down. This means that we’ll have to go up on that land also. There’s another factor. In some cases, the population is growing fewer than many babies being born. This means that we also have to work on our project. It also depends really on where we are in France. In some places, it’s €200 per square meter.

In other places, it will be €2,000 per square meter. It’s difficult to give you an average number. Thank you for your answers.

Moderator, Kaufman & Broad: remind you that if you wish to ask a question...

Nordin Asjemi, Chairman and CEO, Kaufman & Broad: If you want to ask a question, please dial star one on your phone. We’ve not received any questions in writing, so I think we can wrap up. Thank you very much. Thank you for being with us for these nine-month results, sorry. We’ll meet again at the end of January. This is when we talk about the outlook for 2026 and, of course, go through the whole year. Thank you. Have a nice day.

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