Last month the housebuilder told investors it had lopped off £115m from its forecast profit over the next three years after finding projects in its southern division were set to cost more than realised.
This morning (8 November) Vistry admitted it had reduced its profit forecast by a further £25m, £20m and £5m for the 2024-26 financial years respectively, following independent and internal reviews of its business.
It said the latest revision to its anticipated profit “reflects additional developments where the total full-life cost projections to complete the development were understated, and a reduced expectation of FY24 activity across the south division”.
“The understated costs in cost value reconciliations have been found to be from a wide range of cost types and are symptomatic of general control issues, rather than any one particular cost type,” it added.
“A total of 18 sites in the south division have adjusted full-life costs by greater than £1m, with five large, multi-phase sites accounting for circa 60 per cent of the total full-life cost movements.”
The revelation saw Vistry’s share price fall by 18.83 per cent, as of 10.55am on Friday morning.
Vistry said it now expects to make around £300m adjusted profit before tax in 2024, with the completion of 17,500 units and an average selling price similar to 2023.
It said it has a “strong” forward sales position of £4.8bn but acknowledged that its growth in 2025 “will be influenced by our need to stabilise the south division” as well as “prevailing market conditions”.
Commenting on Vistry Group’s trading update, Adrian Lunn, director at surveying firm Eddisons, said: “Vistry’s trading update highlights the ongoing challenges for the housebuilder, especially following the October profit warning.
“The south division’s cost mismanagement has intensified pressures, with an additional £25m loss now expected this year.
“These issues have raised serious concerns around cost oversight and it’s critical that the housebuilder demonstrates that these were isolated incidents confined to one region to restore confidence in the company’s long-term strategy.
“Stabilising the performance and showcasing reliable cost controls will be essential if it’s going to win over investors again.
Source: Construction News