Earnings call transcript: Taylor Wimpey Q3 2025 sees cautious outlook

Taylor Wimpey PLC, a leading U.K. homebuilder, reported its third-quarter earnings for 2025, highlighting a stable performance in net private sales but a slight decline in its order book. Despite maintaining its guidance for full-year completions and operating profit, the company faces a cautious market environment with stock prices dropping 3.29% to £102.32. Executives expressed confidence in the housing market's fundamentals despite challenges such as affordability and regional pricing issues.

Key Takeaways

• Year-to-date net private sales rate remains stable at 0.72.
• Order book value decreased to £2.1 billion.
• Stock price fell 3.29% in recent trading.
• Full-year 2025 guidance for U.K. completions and profit remains unchanged.
• Cautious market sentiment due to economic uncertainties.

Company Performance

Taylor Wimpey reported a steady sales rate compared to the previous year, with a net private sales rate of 0.72. However, the order book has decreased from 7,771 homes last year to 7,253 homes, reflecting a drop in value from £2.2 billion to £2.1 billion. The company operated 210 sales outlets, slightly up from last year's 208, and opened 51 new outlets, indicating a focus on expansion despite market challenges.

Financial Highlights

• Order book: 7,253 homes, valued at £2.1 billion.
• Sales outlets: 210, up from 208 in 2024.
• New outlets opened year-to-date: 51, compared to 34 last year.

Market Reaction

Taylor Wimpey's stock price experienced a 3.29% decline, closing at £102.32. This movement reflects investor concerns over the company's order book decline and the broader market's cautious sentiment. The stock remains within its 52-week range, highlighting ongoing volatility in the housing sector amidst economic uncertainties.

Outlook & Guidance

The company expects full-year 2025 U.K. completions and operating profit to align with its guidance. However, volume growth in 2026 is anticipated to be below the straight-line run rate to the 14,000 unit target, with minimal margin uplift expected until 2027-2029. The potential impact of budget changes and stamp duty adjustments remains a focus.

Executive Commentary

Chief Executive Jenny Daly emphasized the distortive effect of stamp duty land tax on the market, while expressing confidence in the U.K. housing market's fundamentals. Executive Chris highlighted short-term uncertainties affecting 2026 volume growth, underscoring the company's proactive planning approach amid market challenges.

Risks and Challenges

• Economic uncertainty and interest rate expectations affecting buyer sentiment.
• Affordability issues, particularly for first-time buyers.
• Regional pricing challenges, especially in southern regions.
• Limited pipeline in London, impacting market presence.
• Potential policy changes, such as stamp duty adjustments, influencing market dynamics.

Q&A

During the earnings call, analysts inquired about the potential removal of stamp duty and its market impact, London project delays, and affordable housing quotas. Concerns about 2026 margins and the order book were also addressed, highlighting the company's strategic focus on efficiency and planning progress.

Full transcript - Taylor Wimpey PLC (TW) Q3 2025:

Operator: Morning everyone and welcome to today's Taylor Wimpey Trading Update Call. My name is Seb and I'll be the operator for your call today. If you'd like to ask a question during the Q and A session, please press star 1 on your telephone keypad. If you would like to withdraw your question, please press star 2. I will now hand the floor to Jenny Daly, Chief Executive, to begin the call. Please go ahead.

Jenny Daly, Chief Executive, Taylor Wimpey: Many thanks. Good morning all and thanks for joining Chris and I this morning. I know you'll have all seen the statement, so as usual I'll just take a few minutes to run through the key areas before opening up for your questions. The high level story is that we're executing well on the priorities we set out in October, including a focus on efficiency, driving planning, progress forwards and opening outlets. In terms of the market, given the uncertainty for customers as they await the budget and also the trajectory of further interest rate cuts from the Bank of England, sentiment continues to be cautious and affordability remains stretched for many, particularly first time buyers. As a result, there's a lack of urgency with customers as they wait and see the outcome and gaining customer commitment is a key focus for our sales teams.

As we previously stated, incentives remain an important part in this and while underlying pricing is broadly flat, pricing in the southern parts of the country is more challenged. This, together with the low single-digit build cost inflation we have previously flagged, is creating a headwind. All of this is reflected in trading for the second half to date with a net private sales rate of 0.63 compared to 0.71 last year and a cancellation rate of 17%, the same as the comparable period last year.

Excluding the impact of bulk deals, the net private sales rate was 0.61 compared to 0.68 for the comparable period. For the year to date, we've achieved a net sales rate of 0.72, so very similar to the 0.73 at the same stage in 2024, with a cancellation rate of 16% compared to 15%. Excluding the impact of bulk deals, our net private sales rate for the year to date was 0.68 against 0.68 last year. The order book excluding joint ventures as at 9 November is lower at 7,253 homes compared to 7,771 at this point last year and with a value of around GBP 2.1 billion compared to around GBP 2.2 billion in 2024. As you know, we are focused on growing outlet numbers, so I'm pleased that as you will see in the statement, we are on track with outlet openings for the year in the second half.

To date we operated from an average of 210 sales outlets compared to 208 in 2024, having opened 51 this year to date compared to 34 at this stage last year. Turning to planning, as we told you in October, we are seeing positive signs and a shifting more positive sentiment in many local authorities responding to the changes introduced by the NPPF. The NPPF has re-established the much needed tension between house builder and decision maker by reintroducing housing delivery targets and the need for a five year housing land supply and as a result we are seeing councils respond more favorably to our applications, though timing and resourcing challenges remain. By way of an example, in the Northwest we have had a site for 340 homes where a first principal application was submitted in May 2023.

We have progressed well with engagement but have been frustrated by delays in determination. Confirmation of the NPPF strengthened the principle of the site and we saw a marked improvement in the engagement with officers and achieved a determination for beneficial development in September this year. This is only possible because of the actions we have taken in the early submission of applications and the tension housing delivery requirements are placed on local planning authorities via the NPPF. Changes we continue to closely monitor and track progress and local authority sentiment on all of our early applications and are continuing to see a shift from red to amber and green. Of course this isn't universal, so we're not there yet, but the progress we are seeing is consistent with what we expected at this stage.

As a result, we continue to believe that the NPPF and the upcoming Planning and Infrastructure Bill will provide the basis for us to accelerate progress in outlet openings, particularly given our proactive and assertive approach that we've been undertaking over the last couple of years. We have said today that we continue to expect to deliver full year 2025 U.K. completions and group operating profit in line with our guidance. Current market sentiment is challenging and we are working hard to build the order book into the year end. We will update you on the order book as usual in January and then confirm our guidance for 2026 with our prelims in March.

With the benefit of some early spring trading and looking further ahead, we remain very confident in the underlying fundamentals of the U.K. housing market with this pressing need for new homes and our strategy for the business to deliver profitable growth and attractive shareholder returns in the medium term. With that short overview, I'll open up for questions.

Operator: Thank you. As a reminder to ask a question, please press star one on your telephone keypad, and if you'd like to withdraw your question, please press star. The first question is from Will Jones at Rothschild & Co, Redburn. Please go ahead.

Thank you.

Chris, Executive, Taylor Wimpey: Morning.

I might try three quick ones if I can please. First, around, I guess your lead indicators away from sales appointments, website visits, are they tracking similarly to the sales rate? Second was around pricing. You've maintained a broadly flat year on year comment, but just wondering if any change sequentially since the summer and just potentially how you're thinking about possibilities into the new year as affordability potentially improves for customers. In the last, just around build costs and whether from your suppliers you've had any early indications on their expectations or hopes for next year. Thanks.

Jenny Daly, Chief Executive, Taylor Wimpey: Okay, thanks for those, Will. In terms of lead indicators overall, I mean we have sort of significantly uplifted our sort of marketing activity as you would expect. There's a range. I mean organic inquiries are down year on year but we are seeing a little bit of improvement. Appointments held, you know, are broadly flat. Website appointments actually, you know, are looking fairly strong. You know, we've got decent leads, we're seeing some decent levels of inquiries and visits. What's really coming up from the sales teams are that customers are not committing, that they're really holding back and waiting to see the outcome of the budget and, I think, of interest rate trajectory in respect of pricing.

I mean it has got a little bit, a little bit tougher but I mean I think it's still fairly consistent with what we've been saying, you know for a. The north is a bit better, we're seeing some improvement in pricing but the south remains sort of a real challenge from an affordability perspective. We're seeing quite a challenge around chains, a lot of which can be linked back into sort of first time buyer sort of challenges. I think the dynamics are very much similar to our discussions in the past. I think you were asking about sort of the incremental or the sequential possibilities going into the new year. I mean I think the budget, the budget event is proving to be sort of quite, quite pause.

You know, whether it is a hiatus or in customer sentiment, we will need to see what the budget sort of elements and the likely impact on sort of customer. You know, a lot of those impacts could be very individual. You know, if we believe that is a sort of a clearing moment or an opportunity. You know, particularly if there is an interest rate cut alongside that in December, as many are penciling in, then you will be certainly trying to get on the front foot and lean into the early part of 2026 trading and into the spring, the spring budget.

In respect of build costs, you know, we're still in that sort of low single-digit sort of period, you know, a few sort of ups and downs and we're just entering the period where we would be starting to negotiate with our suppliers. It's something I probably can give you a bit more color on in January, but really even then there'll still be very live negotiations on our calendar.

Right, thank you.

Operator: Our next question is from Allison Sun of Bank of America. Please go ahead.

Good morning, Jenny. Good morning, Chris. Two questions from my side. First is if you can give us some color on your London projects which we understand have been pushed from first half to second half. Is there still progress as expected? The second question is, I mean, I do not know if you have any case scenario on what might happen in the budget. Do you hear anything on the stamp duty removal potential? What do you think? If it has been removed for the Taylor Wimpey existing outlets pipeline, do you think you can accommodate all the new demand potentially? Thank you.

Jenny Daly, Chief Executive, Taylor Wimpey: Okay, Allison, just on the London projects, I wasn't quite clear, I apologize on the question. Progress on.

Oh yes, I think you mentioned in the first half there are some big, large projects going on in London. It is expected to, I do not know, maybe complete in the first half, which has some impact on your pricing, if I remember it correctly. Looks like the project has been now pushed to the second half.

Yes.

We wonder if there was an update there. Yes, thank you.

Got it. Sorry. Thank you for that. Yes, we did have some delays with the building safety regulator. I know the team have worked exceptionally hard and that scheme is now moving. That is very, very pleasing in terms of the budget, sort of various scenarios. I mean there is a wide range. Clearly there is a lot of speculation in the markets, you know, in respect of stamp duty land tax. Many of you will know my view. Stamp duty land tax is a tax on mobility and, you know, it has a distortive effect on the market. I think that we can see that clearly at both ends of the market.

You know, at the lower end of the market where we've got actively overcrowding and the top end of the market we've got sort of on the under occupancy and, you know, economic and social mobility I think are, you know, are hampered by stamp duty. You know, I'd add to that when I'm on my soapbox a little bit that I do think that the treasury receipts from stamp duty, you know, could be more than recovered just through the level of economic activity from a more free flowing housing market. That said, Alison, I'll come off my soapbox now. You know, I haven't heard any sort of commentary other than speculation in the press around stamp duty removal.

You know, if there were to be, you know, any form of demand side sort of stimuli or removal of some of the friction points, then I think that the scorecard of sites that we have, which includes many sort of multi phase and larger sites which have the ability to step up delivery, you know, should there be a sort of a rebind or a stimulus to demand. It very much depends on the timing of any announcement as to how much of that can be captured in any one year. I think that we would be in a very good position to capture that were it to happen. Thank you, Allison.

Operator: Our next question is from Zain Bikawa from JP Morgan, please go ahead.

Morning Jenny. Morning Chris. Thanks for taking my questions. Just two on my side. I come back to London, how much of a positive impact you see for the business given the affordable housing quota being reduced? And then secondly, if I could push on the potential landfill tax, is this something that you're still expecting could go through and is there sort of any indication you could give on how much this would impact your business?

Thank you.

Jenny Daly, Chief Executive, Taylor Wimpey: Okay. I mean I think in terms of the package of measures consulted on or going into consultation from the GLA, the reduction in affordable housing from 35% to 20%, sort of reduction in SIL and other things. Look, these are sort of incrementally welcome. I'm not convinced that they are sufficient to address the significant sort of amount of issues that are weighing on housing delivery in London, which are both supply and sort of demand side. As we discussed in October, we're effectively building out of our London schemes. We remain, you know, sort of present and, you know, open in the market. I'm not seeing anything that we think would materially change our position, and we have, you know, very limited sort of pipeline in London.

I believe a more radical approach to stimulating London house building is required in respect of land tax. It's a consultation that's still, you know, we haven't had any response, so we've had no closure to that, you know, and there are concerns that a landfill tax, you know, could have an impact right across the sector. It's a very substantial potential uplift and because the impacts are different depending on the topography, the geology, you know, the nature of a scheme, you know, including the level of sustainable urban drainage or protective land like biodiversity net gain, this included, it's quite hard to calculate. I would point you to the HBF document that they issued some weeks ago and they are recording a figure of about GBP 15,000 a plot.

Thank you very much.

Operator: Our next question is from Amy Galler at Citigroup. Please go ahead.

Yeah, thank you. Just a few questions from me. The first one was on Section 106. Have you seen any improvements in that respect? Post the budget, do you expect that dynamic to become a little bit more easier? The second one was on the land market. On the back of all the sort of tax changes that have been speculated across the press, have you seen any shift in terms of how the land market is reacting to it and how land vendors are considering the outlook ahead? The last one, I appreciate on 2026 guidance, I appreciate that we get more explicit color next year, but is there any sort of broad view of how we should think about the moving parts in the business as we look ahead? Thank you.

Jenny Daly, Chief Executive, Taylor Wimpey: Okay. I mean in terms of Section 106, I mean the teams are continuing to work with long established partners to place Section 106. But it is a challenge and there are some geographies where it's particularly challenging with the absence of, you know, any meaningful number of RSLs in the market. And these are points that are being made, you know, to government not just by ourselves, but by sort of the whole sector on a very regular basis. It's hard to see across the board improvement. Although there are some localities where there's been a slight easing. I mean in respect to post budget, I think it's really the formal normalization of the affordable housing program. That's the dynamic there.

You know, we would hope that sort of the allocations will become more visible and you know, we continue to seek support from government around utilization of cascade mechanisms and other elements. Land market shift, Ami, not as dramatic as we saw last year. I mean, last year was sort of commentary around sort of capital gains tax. There was quite a, you know, there was quite a seminal moment, I think, for many landowners and just trying to get things done and we were able to take the benefit of that in some of our negotiations. I can really only bring to mind one sort of land sort of deal, that's that the landowner is focused on the budget and I think that that's for more personal reasons than a significant there.

In terms of 2026, I mean, you're right, you know, we, it's a quarter three update and we're not going to guide for 2026, although we'll, you know, absolutely tell you what we're seeing in the market. You know, the dynamics are how does the budget leave the customer feeling, what are, you know, the sort of interest rate trajectory as we exit the year, how our order book looks as we exit the year, and really that all-important spring selling season. You know, I think sentiment is a really strong element for 2026 right across the sector.

Thank you.

Operator: Our next question is from Chris Millington at Deutsche Bank. Please go. Hi, Chris, can you double check if your line is muted, please? We can't hear you, Chris. Yeah, we'll move on to the next one. Currently there's nothing else in the queue, so just a reminder, please press Star one if there are any further questions. Next question is from Rajesh Patky from Barclays. Please go ahead.

Yes, good morning, Jenny. Good morning, Chris. I've got two questions, please. Firstly, if you could provide some color on incentive levels and if those have changed compared to what you reported at the first half stage. Secondly, sorry to come back to 2026, but consensus has about 100 basis points improvement in margins for next year. Would you be comfortable with that, given the commentary about underlying pricing being flat and build cost inflation up low single digit at this stage.

Thank you.

Jenny Daly, Chief Executive, Taylor Wimpey: In terms of incentive levels, Rajesh, we have seen them sort of tick up, they have been broadly in that 5-6% sort of bracket through the year, but they're probably sitting at the higher end of that range at the moment. I'll pass you over to Chris, who's been very quiet so far on the call on the second point.

Chris, Executive, Taylor Wimpey: Hi, Mujesh. You know, as you know, Jenny's already said our normal approach to providing guidance for 2026 would be to do it in February next year with the knowledge of the order book that we take into the year and after we've had the opportunity to see the start of the spring selling season. I don't think right now in advance of the budget is a time to be making a change to the pattern of when we guide. You know, we're not going to be giving specific guidance on that today, but just to try to be helpful, you know, I'll repeat some of the comments that I made at the event in October when I tried to be clear. I think some analysts haven't necessarily reflected them yet and obviously that plays through to consensus.

You know I said short term uncertainty may well mean that U.K. volume growth in 2026 is below the straight line run rate to the medium term 14,000 unit target. I indicated that the margin uplift from the land bank evolution would be minimal in 2026, more meaningful in 2027 with the lion's share delivered in 2028 and 2029. In summing up, I think I noted margin growth stepping up from 2027 and also obviously worth remembering that our assumption was of the medium term that sufficient house price inflation to offset build cost inflation which in the short term currently is not the case as you can see from the statement. Hopefully that is all clear. As I said, too early to specifically guide for 2026.

Jenny Daly, Chief Executive, Taylor Wimpey: Thanks Rajesh.

Very clear. Thanks Jenny. Thanks Chris.

Operator: Thank you. Next question is from Chris Millington at Deutsche Bank. Please go ahead.

Sorry everyone, I'll try again. Still learning to use a telephone obviously, but morning and thanks for taking the questions. Guys, a few quickly to talk about the sales rate at the back end of 2024.

I'll at.

Look, I see year to date you're at 0.73. You ended the year at 0.75, so you had a good run at the back end of 2024 to lift that sales rate up for the full year. Can you just talk about quickly what happened and kind of how you may see that feeding into the order book at the back end of this year? That's the first one. Second one's just about the average sales price in the second half of this year. I think you've got a block or something completing from the Postmark development which takes the private ASP to around GBP 400,000 versus GBP 350,000 in H1. Do you think there's a danger that ASP could start to shift backwards a little bit as we go to next year and don't get a repeat of that London one?

The final question I just wanted to ask is about the order book margin. Not talking about 2026 but I remember at the start of this year I think you said the order book margin was down 50 basis points year over year. How are we looking at the order book margin year over year at the moment, if possible? Thank you very much.

Jenny Daly, Chief Executive, Taylor Wimpey: Yeah, thanks, Kristen. Good to hear you. Your second two questions to Chris. On the sales rate at the back end of 2020, think, regrettably, it's really straightforward. The budget did create a bit of a sort of a hiatus and a slowdown in demand, but it was much earlier, so there was still, you know, a reasonable sort of runway in that final quarter of 2024 and that really did drive the sales rate, which was very pleasing. Whereas this year, you know, clearly we've got a much later sort of date for the budget and it's created, you know, has cast a much longer shadow, I think, in terms of how customers are feeling when we saw speculation start, you know, right in the summer. I'll pass you over to Chris on those other two questions.

Chris, Executive, Taylor Wimpey: Yeah. So, you know, continue to expect that the full year blended U.K. average selling price will be approaching GBP 340,000. You're quite right. You know, there was that switch from half on half to more completions in the, from central London in the second half, pushing the average selling price up. The risk is probably to the downside if there are a few more affordable homes in the mix, but we're still happy with that guidance and then how that plays out into next year. I'm expecting it to be at this early stage, pretty flat, that and then the order book margin year on year. Obviously, you know, we're not giving 2026 guidance today.

You know, relatively small volumes relative to next year, obviously in the order book because you've got a mix of the order book between, you know, what's going to be delivered this year versus what's going to be delivered next year. Maybe ask me that question again when we get to January and we've got a clean order book.

I'll make sure to do that. All right, many thanks for your answers.

Operator: We have no further questions in the queue, so I will hand back to Jenny for closing comments.

Jenny Daly, Chief Executive, Taylor Wimpey: Thank you, Seb. Thank you for your time and questions this morning. Clearly there are market challenges right now, but we're working on delivering what we told you in October to ensure we're well set up in land and outlets that we need to drive progress. We'll see you again in the new year. Thank you, everyone.

Operator: This concludes today's conference call. Many thanks for joining. You may now disconnect.

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