Decrease in FTSE 100 construction company Persimmon's share price by 3% despite increased revenues and profits
Persimmon Reports Strong First-Half Results, but Shares Fall Amid Profit Guidance Adjustment
Shares in FTSE 100-listed Persimmon dropped 2.7% during the midweek session, despite the company reporting increases in sales, profits, and completions for the first half of 2025.
Persimmon's housing revenues increased by 12% to £1.31 billion, and the average sales price for its private forward order book rose by 8% to £284,047. Net private sales for the five weeks since the end of June were 0.61, and private completions for the company rose by 3,987 over the six months.
The underlying operating profit improved by 13% to £172 million, and Persimmon's underlying operating margin rose by 10 basis points over the year to 13.1%. Including partnerships, Persimmon's order book is 9% higher at £1.86 billion, with the private forward order book up 11% year on year at £1.25 billion.
Despite these positive operational results, shares dropped 3.4% after the company lowered its profit outlook for 2026. Analyst Andy Murphy of Edison stated that Persimmon's half-year update shows "steady progress" despite housing market challenges.
However, market concerns over tighter margins, high mortgage interest rates (still barriers to buyers), and lingering regulatory issues contributed to share price weakness. Although Persimmon’s operating profit and order book looked strong, and the company maintained its dividend and 2025 outlook, the acknowledgment of budget constraints and mortgage affordability challenges weighed on sentiment.
Persimmon expects to complete 12,000 homes in 2026. Net cash for the company decreased by £227.2 million in the first half to £123 million. The interim dividend for Persimmon remains frozen at 20p per share.
In summary, Persimmon’s H1 2025 results showed a 12% revenue increase, a 13% profit rise, and a 4% increase in home completions, with improved operating margins. Despite these positive operational results, shares dropped 3.4% after the company lowered its profit outlook for 2026. Market concerns over tighter margins, high mortgage interest rates, and lingering regulatory issues contributed to share price weakness. The share price decline reflects investor caution about future profitability despite current strong performance and growth prospects.
[1] Persimmon Half-Year Results 2025 [2] Edison Analysis of Persimmon Half-Year Results 2025 [3] Persimmon Share Price Drops Despite Strong H1 Results [4] Persimmon Lowers 2026 Profit Guidance, Shares Fall [5] Market Concerns Over Persimmon's Profit Guidance and Housing Market Challenges
- The strong financial performance of Persimmon in the first half of 2025, including a 12% revenue increase and a 13% profit rise, indicates a positive trend for the business and finance industry.
- Despite the FTSE 100-listed Persimmon's strong housing industry revenue growth and improved operating margins, concerns over tighter margins, high mortgage interest rates, and regulatory issues have caused a decline in its share price, reflecting investor caution about future profitability.
