Key facts
- Vistry Group expects a pre-tax loss of £30m for the first half of the year.
- The housebuilder has significantly increased discounting on unsold private homes, averaging 7.1%.
- The value of unsold private homes has been reduced from £600m to under £300m.
- Finance director Tim Lawlor is leaving the company in October.
- Vistry is implementing cost-saving measures, including voluntary redundancies, to cut annual costs by £25m.
- Market conditions deteriorated in the second quarter, impacting customer confidence and sales.
Vistry Group, one of Britain's largest housebuilders, has issued a profit warning, anticipating a loss in the first half of the year due to significant discounting on unsold properties. The company's shares fell by 8% following the announcement and the departure of its finance director.
Chief executive Adam Daniels, in his role for three months, has implemented price cuts to clear unsold inventory. Vistry has reduced its stock of unsold private homes from £600 million to under £300 million, with an average discount of 7.1% offered to buyers, a substantial increase from 1.4% in the same period last year. The company now forecasts a pre-tax loss of £30 million for January to June.
Vistry has also slowed or delayed construction on some sites. The firm cited worsening market conditions in the second quarter, attributing them to increased uncertainty and reduced customer confidence, partly influenced by geopolitical events and rising mortgage rates following higher inflation. Despite these challenges, Vistry does not anticipate a significant market improvement in the near future.
To mitigate costs, Vistry aims to slash its annual expenses by £25 million through voluntary redundancies and more selective hiring. The company directly employs 4,400 people. Chief financial officer Tim Lawlor is set to leave in October.
The company is also focusing on building social homes in partnership with housing associations and other investors, and is negotiating new framework deals. However, there are concerns about the timing of state funding for these projects under Labour's proposed housing programme.
Housing analyst Anthony Codling of RBC Capital Markets questioned Vistry's guidance, suggesting the company missed an opportunity to address potential impacts from changes in government policy on social housing deployment. He also criticized the lack of explicit mention of potential negative impacts on upcoming quarters.
Following previous profit warnings and a reorganisation, Vistry's share price has declined by nearly two-thirds over the past year. The company, formerly known as Bovis, has a history of acquisitions, including Galliford Try's housebuilding division and Countryside. Vistry and its Countryside Partnerships division are also facing a class-action lawsuit over alleged price collusion.