Key facts
- Vistry shares fell nearly eight percent on Monday morning.
- The Financial Times reported that Allianz Trade has cut the level of insurance cover it extends to Vistry's suppliers.
- This move could potentially threaten the housebuilder's cash flow by prompting suppliers to demand upfront payment.
- Vistry has denied these reports, stating they are unaware of any supplier withdrawing trade and have seen no supply chain interruptions.
- The company is forecasting a £30 million pre-tax loss for the first half of the year.
- Vistry's finance chief, Tim Lawlor, is leaving the company.
Vistry shares slid nearly eight percent on Monday morning amid speculation that credit insurer Allianz Trade has significantly reduced its cover for the housebuilder's suppliers. This development has renewed fears about the company's cash flow and financial stability in a challenging housing market.
The Financial Times reported that Allianz could cut Vistry's cover by up to 70 percent, a move that could compel suppliers to demand upfront payments instead of deferred terms. Such a change could strain Vistry's liquidity, especially as the company has already been selling land to bolster its balance sheet.
Vistry has denied the reports, stating that it is unaware of any supplier withdrawing trade due to credit insurance changes and has experienced no supply chain interruptions. A spokesperson added that credit insurers continue to provide substantial cover that meets the group's requirements.
These concerns were amplified by comments from Duncan Cooper, the boss of building materials supplier Travis Perkins, who last week mentioned that cover had been pulled from a "fairly significant national housebuilder." Vistry's shares had already fallen about 10 percent following Cooper's remarks.
The housebuilder is navigating a difficult period, including a slowing housing market and rising building costs. The company recently forecast a £30 million pre-tax loss for the first half of the year and announced that its finance chief, Tim Lawlor, will be leaving.
Russ Mould, investment director at AJ Bell, noted that investors are concerned, increasing pressure on Vistry to reduce debt and manage the current market conditions.