Taylor Wimpey PLC (LSE:TW.) has warned that operating margins are set to fall this year, even after delivering a 'solid' performance in 2025, as affordability pressures continue to weigh on demand and a weaker order book pushes profits towards the second half.
The housebuilder said it expects its group operating profit margin to be lower in 2026 than in 2025, citing softer pricing on bulk deals, modest construction cost inflation and a lower starting order book.
It added that trading this year is likely to be more heavily weighted to the second half than in previous years.
Jennie Daly, the chief executive, said: “While too early to anticipate the outcome of the Spring selling season, we have seen a good level of enquiries and are well positioned to support customers through their buying journeys.”
She added that, although government planning reforms had helped unlock new permissions, demand remained subdued. “While affordability is slowly improving, demand continues to be muted - particularly among the important first-time buyer category - which will constrain overall sector output.”
The comments came alongside details of a resilient 2025, delivered against what the company described as challenging market conditions. Total group completions, including joint ventures, rose to 11,229 homes, up from 10,593 a year earlier. UK completions, excluding joint ventures, landed in the middle of guidance at 10,614 homes.
Average selling prices increased, with private UK homes sold for an average of £374,000, compared with £356,000 in 2024. Overall average selling prices, including affordable housing, rose to £335,000. Revenue increased to about £3.8 billion, driven by higher volumes, stronger prices and land sales.
Operating profit for the year is expected to be around £420 million, broadly flat on the previous year, but margins slipped to about 11% from 12.2%. Taylor Wimpey said land sales boosted margins by roughly 0.6 percentage points in 2025, a benefit that is not expected to repeat this year.
The company ended the year with an order book worth £1.86 billion, down from £2.0 billion a year earlier, reflecting lower demand, particularly among private buyers. Its net cash position fell to £343 million, from £565 million, after investment in land and development.
In Spain, trading remained firm, with 494 homes completed at an average selling price of €455,000, although the forward order book there also declined.
Looking ahead, Taylor Wimpey stated that private selling prices have held up, but pricing on bulk deals agreed upon in the second half of last year was weaker, resulting in an overall order book pricing that is about 0.5% lower year-over-year. Taking this together with cost pressures, the group said margins would come under further pressure in 2026.
Despite the caution, Daly said the company remained confident over the medium term, pointing to its landbank, planning pipeline and balance sheet. “Against this backdrop, we remain focused on unlocking value and maximising shareholder returns in the medium term,” she said.