[Non-English content] . Good morning, everyone. Welcome to the financial results of Kaufman & Broad for the first nine months of 2026. Before we start, we would like to let you know that regarding the Q&A session, we will first answer the questions asked on the phone, and then we answer the written questions. You can use the Q&A tab on the webcast. I will hand over the floor to Mr. Nordine Hachemi, Chairman of Kaufman & Broad, Mr. David Laurent, Deputy CEO, and Mr. Bruno Coche, CFO. They are going to comment on the business results and also the outlook. You have the floor.
Good morning, everyone. Good morning. Thank you for being here with us this morning. We are going to present the results for the first nine months of 2026.
I would like to remind you that our financial year starts on the 1st December and ends on the 30th of November. So the current fiscal year, the numbers that we present are at the end of August 2026. If you compare with the statistics from the market or government statistics, you have to bear this in mind. Sometimes we are able to truly compare the numbers, sometimes a bit more difficult. Let us begin with the first slide. You have the key indicators, key operating indicators. First, the housing and portfolio, number of units. That is rather stable. As we said last time, this is going to be what we are going to do during the upcoming year 2027, to work and make sure that this portfolio grows, because there is going to be an economic recovery in some time, and we will get back to this.
Now, the housing orders in volumes and in numbers. This is rather stable compared with last year. That is for the numbers. In value, there is a slight decrease. This is due to the product mix that we have been marketing. Smaller flats with unit values that are lower. Nothing that is really significant when it comes to the midterm business. Now, take-up period. Our take-up period shows that our offer is highly dynamic. We have a good control over our sales and the momentum. The take-up rate is 4.6 months. I would like to remind you that this take-up rate is the time we would need to sell all of our commercial offer if we were to stop marketing new products. It only takes 4.6 months to sell everything that we have as of today.
It is important because this means that if, or rather when the macroeconomic parameters, tax rules and legislation changes, we are able to react very swiftly and to adapt our products to those new parameters. Our backlog is at approximately EUR 2 billion. Rather stable also for housing and EUR 248 million for our commercial property business, logistics, et cetera. Now, let us say a few words about the market before I hand over the floor to David, who is going to talk about our activity during that period of time. As you can see on slide four, you have the numbers over time for building permits and also housing starts. We are quite stable when it comes to the time it takes between the housing starts and the issuance of the building permits. In any case, the levels are very low. They are at a historical low point.
When it comes to Kaufman & Broad, people are interested in our programs because we are good at selling our products, but people really have a wait-and-see approach because of the current environment. At the last presidential elections, we did not really see any impact of the elections because it was not necessarily a topic of discussion, or it was a bit negative when we talked about housing, because we had Mr. Pisani-Ferry, and I think everyone will remember him because he explained to everyone 10 years ago that housing was a non-productive investment. Now I would like him to explain this further, because now we are faced with a housing shortage. And I would like him to talk about all those productivity impact. And within the current campaign, people are realizing, all actors, all politicians, all candidates are realizing that this is an issue.
They are making all sorts of promises, and officials are not making any decisions right now. Buyers are also waiting to see what is going to happen. And obviously, the promises are quite positive or perceived as such by the buyers, but also by the local government when they are going to issue building permits. Now, regarding the mortgages, the volumes are down. It is not because banks do not want to lend money. It is because there are fewer applications. You have the evolution of the interest rates. They are going up. But this is nothing to be concerned about, because if we have enough building permits and if landowners become more reasonable, which is currently happening, we are able to market products that are in line with the buyer's purchasing power and phase in view of the interest rate.
This is a slide that Bruno will comment in a few moments. In the U.K., we saw a good recovery of the housing sector, and the market reacted very swiftly. And hopefully, we will see something similar here in a few moments, in a few months. And this is something I like to tell my friend, Mr. Pisani-Ferry. What is a non-productive investment when it comes to housing? Housing is jobs created, tax revenues, all sorts of economic benefits. And it is good to remind people of this, even though people had forgotten about all this for some time. Slide number nine. Before I hand over the floor to David, and we will be able to discuss this when we review the annual resource. This is what we are envisaging regarding the future scenarios in the years to come.
Right now, people are having this wait and see attitude, and this impacts the number of building permits. And customers also are waiting to see what kind of schemes will be implemented to help them make those acquisitions. And things will then be rather stable until 2028, and as of 2028, 2029, there should be a gradual increase in the number of building permits, increase in commercial offer also, and then construction start will go up starting in 2029, 2030. And obviously, as you all know, and we will discuss it throughout the presentation, our positioning at Kaufman & Broad, despite the dire environment, is quite interesting if we think about a future recovery scenario, even though this recovery will take a bit longer than we had anticipated in the past. And David is going to talk about our business during that period of time.
Good morning, everyone. Nordine talked about our key indicators, and I will now provide you with some additional information to help you assess our performance compared with the market situation. This is now slide number 11. Our housing orders are stable during the six and nine first months 2026 compared with the same period in 2025. This is especially true if you compare this with the market as a whole. We would have on the market, the market will be down for 2026, -18.3%. If this number were to be confirmed, this would truly show that we are really resilient. This is a relative performance, relative good performance that can be explained by an average take-up period that is extremely low, as Nordine said, compared with that under market that is still at extremely high level, 23.1 months. This is a historical high.
This short take-up allows us to be extremely reactive and to adapt to the market. It also proves that we have a true know-how that our teams are able to anticipate on the future situations and the borrowing capacity of our buyers. Our brand is a strong brand, and we are amongst the only developers that have internal salespeople, and they are good at selling our commercial offer extremely rapidly. You have our customer breakdown on this slide. As Nordine said in the introduction, our product mix has evolved, and block sales have increased between the first month of 2025 and the first nine months of 2026. Now we have moved up to 69%. This explains also the decrease in housing reservation numbers, because sales price are lower than when you do individual sales.
During the first nine months of 2026, we had those serviced residences that were sold in blocks, but the units are smaller, and the prices per unit are also lower. You have our housing orders for the first nine months of 2026. The number is comparable to the numbers that we had, the figure that we had in 2023 and 2024. This would be the EUR 749.8 million. You have the housing land portfolio is quite stable, approximately 32,000 units, almost six years of business. What is interesting here is that, despite this increased activity, we have been able to keep it at a stable level. As Nordine said, we want to move beyond those 32,000 units, and we will get back to this in a few moments. Our housing backlog is also quite stable.
Approximately EUR 2 billion for housing units, more than two years of business, and we have been able to keep it at this level despite a more competitive environment or more complicated environment. Our commercial offer is down, well, slightly down at end of August 2026 compared with August 2025. This is due to the upcoming elections. Some starts or some commercialization have been postponed. We have also launched quite a few projects, since the beginning of the year. We intend to launch an additional 13 new projects during the last quarter. At the end of 2026, we should have similar numbers to those that we had at the end of 2025. One last indicator, that is the physical inventory, the number of housing units that are up for sale.
Since 2021, we have implemented a formal process to identify the projects for which we are to have a large number of units for sale between nine and 12 months of the delivery of those projects in order to speed up the sales. This has been fruitful. At the end of 2026, we see that the number is lower than in 2021. Whereas the market, generally speaking, has seen its number of units go up sharply, and other developers have a large number of units that are ready that have not been sold yet. We have approximately six years of business in store. Our teams are able to renew this land portfolio despite stricter criteria. We are also able to design housing units that are in line with the need and the demands of our prospects. We are also good at selling those fast.
Obviously, we expect a greater number of building permits. As soon as this number goes up, starting in 2028, hopefully, as potential candidates are realizing that this is a real issue, then we will be ready to react promptly as soon as those permits are being issued. When we presented the first half results, we announced that we had been awarded two prizes. We were able to give you more details about those two activities. We were awarded two projects. The first one was a highly selective project in Bagneux. We now have a final building permit, more than 28,000 sq m of surface area. We are going to apply for a new building permit with a few modifications, and we should start building soon. This is the redevelopment of a former commercial wasteland. The second project in Cergy-Pontoise.
This was also a restricted project, and the aim is to turn a 20,000 sq m office space into housing units. This is going to be totally redeveloped and going to have a sales before completion approach. We were awarded this project. There will be 14,000 sq m of office unit and 90 housing units. This is not in our commercial backlog yet because we do not have the final signature yet. Slides 20 and 21. Slide 20, this is the anticipated recognition of revenue for the Austerlitz project. No changes here, same numbers as during the last quarter. Slide 21, this is the Marseille project, 30,000 sq m sales before completion project. That is for EDF Group. This was launched at the end of 2025. I will now hand over the floor to Bruno Coche, who is going to present the financial performance.
Good morning, everyone. Thank you, David Laurent. You were given the main financial aggregates this morning. Let us have a look at the revenue. It stands at EUR 730.8 million, comparable to that of the ninth month of 2025, a 2% decrease only. That is the first thing. Regarding housing units, EUR 550.2 million, down 8%. 75% collective housing units. This decrease was also seen during the first half results, and this is due to the fact that some activities were postponed, some projects were postponed, because we had not got the building permits yet for some of them, which meant postponed commercial operations. This, unfortunately, is what we saw during the first half, and this is an issue that we are still faced with right now. Regarding commercial property, this is mainly those two projects, the Austerlitz project and the EDF project in Marseille, EUR 167.9 million.
A sharp increase compared with last year. This is essentially due to the Marseille EDF project that we did not have last year. If we have a look at our gross margin, you will see that it is at EUR 151.8 million, up 1.8% over 12 months, absolute value EUR 2.6 million. Revenue down, gross margin up. Here again, this shows that we have a good control over our sales prices. We are able to sell our products fast, our new office fast. Also, when there is some inventory that is a bit more mature, we do not hesitate to speed up the sales in order to avoid any price decrease. Regarding the costs, direct costs with building costs and cost of land, we also have a good control over those parameters. This is proven by the numbers.
Nordine said that when it comes to land, people are now making more conscious decisions, and we had always decided to really focus on our margin and our revenues.
EUR 2 million. Current operating margin, EUR 58.2 million, therefore up 2.5% in absolute value, EUR 1.4 million versus 2025. Here again, this is a reflection of the gross margin, but also the fact that we have good control over the operating expenses at EUR 93.6 million, that is 12.8%. If we look at current operating margin, 8% in line with our guidance. If we look at the previous years, we are within the average, and that really shows great stability. Great stability in terms of operating income. We will go down. Cost of financial debt, EUR 5 million, down from last year's. Net attributable income, EUR 33.6 million, almost flat compared with 2025. Very stable over a year. The share of the income from the associates is down, but that reflects the drop that we have in the housing business.
If we look at the balance sheet and WCR is still negative, a -EUR 163 million. However, the WCR is shrinking, as you can see. This is due to Austerlitz, and as the project is nearing completion as planned, the contribution is smaller to the negative WCR. In terms of housing, WCR is within the usual bracket between 10% and 15%. This again shows that we have good control over these parameters as well. We will continue with the balance sheet. If we look at equity, EUR 224 million, up from last year's. That really shows again that we have a good control over our financial structure, and we paid a bit more than EUR 40 million worth of dividends last May. Net cash, EUR 261.9 million, excluding IFRS 16, and therefore smaller, but slightly positive. That is due to the change in WCR over the period.
Then financial capacity, we have an RCF undrawn line, EUR 200 million so far as we speak. That is a reminder. Another reminder is that if we look at cash, that is EUR 261.9 million. There is EUR 200 million that will be used for the Austerlitz project to pay for the land, and that will happen by mid-2027. Then the gross financial debt is zero. It has been the case for a while. Active cash and cash equivalents, we have talked about this. If to this you add the RCF, we have total financial capacity nearing EUR 466.4 million. Therefore, that means we have enough money for the coming quarters. Here is another reminder. Fitch has confirmed our investment-grade rating. That was done in summer, and it has been the case since 2022, we have had the same rating from Fitch.
It really shows that we are able to adapt to the markets, and we have a good financial structure. To conclude, for these nine months, what can we say? Well, we can consider that our performance is okay. If you look at land portfolio, we have the equivalent of six months of business. The housing backlog represents almost two years of business, nearing EUR 2 billion. Financial structure is solid. As David was saying earlier on, the brand is appealing. We are known as a good developer that designs good projects and sells them quickly. These are factors that people remember. By people, I mean the landowners, but also the local governments. Finally, the outlook and the guidance. We will stick to the outlook. That is revenue that will be at a level that will be comparable to 2025.
The current operating margin will be close to 8%, and net cash and cash equivalent will remain positive. There we are. I am done. Now the floor is yours.
The time has come for the Q&A. We will start with questions online. You can ask your questions now. For this, you will have to dial star one on your telephones. The first question from Ebrahim Homani from CIC. The floor is yours.
Thank you. Thank you, gents, for this presentation. I have three questions to ask. First, your market shares. Have you seen any market share gains mechanically? Because your performance is better than the other players' performance. Second question, your margins for 2027. They have been really good over the past nine months, but what about the cost of entrants? Is that a risk for 2027?
Third question for 2027, could you give us more color about the booked revenue for residential, non-resi, but also student residences? Thank you.
Hello, thank you for these three questions. Well, as far as the market shares are concerned, we usually said that we do not have any objectives in terms of market share. Well, mechanically, by the end of the year, as you said, we will see if the market share is up or down. The worst thing to do in our business is, and by the way, well, it has been years that we have been saying this, but unfortunately I must say, we are always right. That is, if you have a market share objective, it does not mean much. Very easy to do, but that is done to the detriment of the margins.
Buy the land at any cost, sell your units at a very low price, then you get a big market share. We are not looking for volume race, nor are we looking for a market share race. We do not communicate. We do not say anything about market share. By the way, we are not very much interested in our market share, are we? Because it does not mean much. We are not selling printers with a loyalty program to sell cartridges and then more maintenance. Once the flats are sold, the only certainty we have from the statistical point of view is that we will not see these customers again before, say, seven years. So it is more than a presidential term. You have asked other questions, sorry for my answers, but you have asked questions about 2027. That is questions two and three. We are not saying anything about 2027 yet.
We will do this when the time comes, that is in January, at the end of January. But rest assured, we will always keep an eye on preserving our margins. This is the principle objective that we have.
Okay, what about the increase in the price of entrance? Do you think that the price of entrance is going up or not?
Answer, you mean construction costs going up?
Yes, that is what I meant.
Okay. So my answer is, well, as we speak, maybe David can answer this. Yeah, David, go for it.
No. Well, if you look at the current bids that we are working on, as you know, usually we have contracts with the companies in all types of trades, all the trades in our business. We have not seen any price increases.
Well, we know that some suppliers are trying to negotiate some increases with the companies we are working with, but for the time being, we have not seen any impact of this on our prices within the framework of our bidding processes. Thank you.
Next question from Emmanuel Parot, and that is Invest Securities. The floor is yours.
Hello. Can you hear me okay? I have two questions connected to the sharp increase in long-term rates. First, I have a question about your commercial offer. What about the credit rates before the end of the year? Do you know what the trend is going to look like? Because it is connected to the solvency of some of your clients. I know it is going to be difficult to answer. The second question has to do with block sales.
We have seen resilient volumes during Q3, so my question is to know if demand is still going to be sustained in social housing, given the political backdrop and the savings plans that people have in France, the rates of which could go up. Thank you.
Well, as far as rates in general, loan rates are concerned. Well, this has been factored in. We did that when the year started. We said the rates are most likely to go up again. Well, not that we really thought about the imported inflation, but France's deficit would not go down. Well, you do not need to be that bright to understand that. But the projects that we are currently selling today, and that is what it means, these projects have factored in the fact that our clients have less purchasing power compared to the clients we had the year before.
We have sustained selling rates. We have good contact points with our clients. The clients sometimes are in a wait-and-see position because they are waiting for a go ahead from investors or schemes. This might happen during the presidential election. Some people who intend to buy think they might buy after the French elections. That is right, and they can perhaps postpone their buy. The French savings plans and the rates going up, possibly. The social housing landlords have decreased the volumes that they buy. As you know, when it is a new project, they finance this with their own money, their own equity, a lot of debt, that is a long-term subsidized debt, because they have another source of income when they buy social housing. So they can take up these debts.
Today, they have used lots of their money for the thermal insulation of these units, and therefore, they cannot increase the rents. There is no new source of income from that for them in terms of energy savings, as you know, because it is good for the tenants, not for them. So they do not really very much react to the rates going up because they did not borrow that much. They usually used their money for thermal insulation of the flats. Next year, what about next year? It all depends on who is going to win the elections. Of course, it is always a support given to the first buyers, everybody agrees, and then it all depends on the political parties.
Some parties will say, "We want to support those who will buy social units." Others want to put an end to the French SRU law, which is about a minimum percentage of social housing units. We do not know what is going to happen in 2027. In any case, we will adapt for the reasons I mentioned before. That is, we can sell very quickly, as I said before. We are a nimble company, and that is what is good and strong about our model. We can sell very quickly. What we have for next year will adapt to the market conditions.
Final question, perhaps about your land business. It is going down because the rates are going up. Is that something you have seen on the ground?
Oh, yes. Clearly. Mainly the landowners, those who own quite big chunks of the land. David, for instance, has worked on very comprehensive projects. We were not the best bidders in terms of price, but these landowners that have quite a lot of land, they know that if the price is too high, if the project never comes to fruition, they do not want that. They want a more reasonable price that comes from a company such as ours, and that is why they choose us. They would rather have a reasonable price, but you are certain that the project will grow rather than some type of miracle that will vanish up in the air, which was the case in the recent years. We are a solid group, which is good for us. As you know, we have not dropped that many projects on the way.
This is what we have seen, and that is true for the very large project, we have very attractive conditions.
Regarding this decrease, do you have any numbers? The decrease in the price of land, do you have any numbers in mind?
Well, we will succeed in doing this, but we do not necessarily want to communicate on this and give any figures.
Okay. Thank you.
Well, as far as you are concerned, we provide the operating margin.
When we say that we keep our guidance despite increased interest rates, this is probably due to the fact that we are able to decrease our costs.
Well-
This will rather be in 2027. So you have increased interest rates, your building costs do not necessarily go down. So the only thing that you can change is the price of land. So I simply wanted to make sure that this is something that you were implementing or doing right now, and that will translate in the P&L in 2027, 2028.
Well, people do not impose any projects upon us. We do not try to achieve specific market shares or volumes. We only launch projects that are in line or that match our profitability criteria. If we have to decrease our selling prices because our buyers have a decreased purchasing power, if we have to increase building costs because those costs go up, then the cost of land will go down, because otherwise we will not launch the project. This is what I am saying. We provide our profitability objectives, and then we decide accordingly. We are not going to simply do with things that are imposed on us.
Thank you.
Next question. Jon Pérez from Kepler Cheuvreux.
Good morning. Thank you for this presentation. I have a question regarding the P&L during Q3. I see that development and program expenses, from EUR 4.5 million - EUR 7.6 million. What falls into that category? What would explain this change?
I am going to answer this question. Let us be precise. We are talking about an increase from EUR 22.4 million to EUR 23.2 million. This includes all the small provisions, development, et cetera. It is not significant for the nine-month period, and it could vary for a similar period of time. Nothing specific to say to this.
Well, still, I was referring to Q3 because there is a greater change during Q3.
Here again, there is no specific conclusion to draw from this. We review our projects on a regular basis, and we could decide to affect provisions to one or another. You cannot really make decisions on a quarterly basis.
Thank you.
There are no further questions on the phone, so I am giving you the floor back.
Okay. Thank you. Now let us move on to the written questions. Jean-Pierre Levay has two questions. Question number one: Mr. Laurent indicated that Kaufman & Broad is the only developer that had internal salespeople. Does this mean that you never sell anything via CGPs or third parties? Second question, Artémis Participation keeps selling shares in order to finance the exit of previous Kaufman & Broad people.
When you are going to have a policy that associates managers and employees to the equity or capital of the company.
To answer the first question, regarding our share ownership, all our employees, this is quite stable, even though there would be a few changes regarding Artémis, which is a very specific vehicle that has a lot of constraints, as the person asking question is noting. This is mainly due to the fact some people are retiring or simply leaving the company. This is being offset by employee share holdership policy is quite dynamic, and we have remained very stable for some time. The Artémis exits are being offset by other entries, by other means, be it employee share plans or group savings plans. We also launched a capital increase operation every two or three years, and this is only for our employees.
Regarding our salespeople, we are amongst the early ones to do this, but not the early ones. It is extremely important for us because it allows us to have a very good understanding of the needs of our clients in real time. Obviously, we also work with a community of prescribers and CGPs. This allows us to have a complete commercial system in place.
Thank you. There are no further questions, and we have reached the end of this presentation.
Well, thank you. Thank you, everyone. We will meet again for the presentation of the annual financial results end of January. Sorry, it is on the 2nd February. Thank you. Have a good day, everyone.