Housebuilder revises expected profit down by 拢80m due to 鈥渦nderstated鈥� full-life cost projections on nine schemes
Vistry Group has revised down its expected profit for 2024 by 19% after saying build costs on nine schemes will be higher than projected.
The housebuilder, in a trading update this morning, said it had recently became aware that cost projections to complete nine of its 46 developments have been understated by 10%.
Vistry estimates the one-off impact of adjusting for the revised development costs will reduce the housebuilder鈥檚 adjusted pre-tax profit by 拢80m this year to 拢350m. The change will also reduce its adjusted pre-tax profit by 拢30m in 2025 and 拢5m in 2026.
The nine developments, out of around 300 in total, are all in its southern division.
A spokesperson for Vistry said: 鈥淲e believe the issues are confined to the South Division and changes to the management team in the division are under way. We are commencing an independent review to fully ascertain the causes.鈥�
Vistry said it still expects to deliver more than 18,000 homes this year. This would make it Britain鈥檚 biggest housebuilder as Barratt said it is likely to build 13,000 to 13,500 in its current year, while Barratt鈥檚 merger partner Redrow completed 1,894 homes in its half-year.
>>See also: 鈥業鈥檓 extremely demanding鈥�: Greg Fitzgerald on delivering the Vistry growth plan
>>See also: Contractors and suppliers 鈥榩ositive鈥� about Vistry price reductions, boss insists
Vistry added: 鈥淭he group is confident in its unique partnerships strategy. Notwithstanding the one-off adjustment announced today, we remain committed to delivering a strong increase in high quality mixed tenure housing, our medium-term target of 拢800m adjusted operating profit, and 拢1bn of capital distributions to shareholders.鈥�
Reacting to the 19% reduction in expected adjusted pre-tax profit, Anthony Codling, managing director at RBC Capital Markets, said: 鈥淭his is a big cut, and we expect the price of the shares to fall significantly today. Investors will be looking to understand how the issue arose, how it is being dealt with and why and how Vistry is confident that the issue is confined to one division.鈥�
Stephen Teagle, chief executive of partnerships at Vistry, last month told 好色先生TV鈥檚 sister title Housing Today the housebuilder could build 40,000 homes a year if the government follows through on its plans for housing and planning reform.
Vistry also confirmed this morning it remains committed to its 拢130m share buyback programme announced last month.
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