Build-to-rent specialist says operating profit will be 10% lower than expected as sales delayed in wake of mini-budget
Watkin Jones has said its full year operating profit will be around 10% lower than expected after 鈥榬ecent market volatility鈥� hit sales.
The developer, which specialises in built-to-rent and student housing, gave the warning in a trading update for the year to 30 September this morning, prompting its shares to fall by more than a third.
It said purchasers of its schemes have been hit with increased funding costs which meant two forward sales expected to close in September were 鈥榠mpacted by the recent market volatility鈥� and will now be completed in the next financial year.
It said that as a result 鈥渢he board now expects FY-2022 underlying operating profit to be c10% below current market expectations鈥�.
The firm is the first developer to identify a specific financial cost from the fall out from chancellor Kwasi Kwarteng鈥檚 mini budget statement, which presaged a large increase in borrowing costs.
It said: 鈥淲hile in the H1-2022 build cost inflation was mitigated by increasing asset values, the group has seen some pricing and margin softness on sales concluded in the second half, with purchasers facing increased funding costs.鈥�
It added that while it expected demand from institutions for its products to remain robust 鈥渨e also believe it is prudent to assume that margin pressure as a result of purchasers鈥� elevated borrowing costs will continue into FY-2023鈥�.
Watkin Jones said its operational performance in the second half of the year was still 鈥渕aterially stronger鈥� than in the first half. The firm previously reported a pre-tax loss of 拢16.6m for the six months to `31 March after setting aside 拢28m for building safety remediation work.
No comments yet