Profits at the UK housebuilder Vistry Group have slumped by more than a third in what it described as a “disappointing year” but it is pinning hopes of a turnaround on the government’s promise this week to inject £2bn into affordable homes.
After three profit warnings last year, Vistry suspended dividend payouts to shareholders on Wednesday and its shares were the biggest faller on the FTSE 250 index, dropping by as much as 8% before easing back to 5.5% down.
Greg Fitzgerald, Vistry’s chief executive, said 2024 had been challenging but welcomed the government’s affordable housing pledge, adding that the builder would “be seeking to progress as quickly as possible with our partners to deliver quality new homes across the country”.
The Treasury said this week it would fund 18,000 affordable and social homes as part of the target to build 1.5m homes over the course of the parliament.
The Investec analyst Aynsley Lammin said: “Partnership homes demand has clearly been softer of late, not helped by the lack of funding, but the news of a £2bn government funding injection should help from later this year.”
Vistry, formerly known as Bovis Homes, has pivoted towards building affordable homes in partnership with housing associations in recent years. The company’s adjusted profit before tax fell by 35% to £263.5m last year, with the total number of completed properties up by 7% to 17,225. Completions done in partnership with housing associations increased by 18% to 12,633, while homes sold on the open market were down by 15% to 4,592.
This year has not got off to a strong start, with the builder’s sales rate dropping to 0.59 per site per week, from 0.81 in 2024.
It is trying to draw a line under a damaging accounting scandal after admitting in November that cost overruns on building projects were worse than previously thought. It launched an independent review of operations in its south division the month before after revealing it had “understated” total build costs by about 10%.
This means Vistry is taking a £165m hit, reducing 2024 profits by £91.5m with the remainder affecting future years. There were also some delays to concluding agreements with its partners at the end of the year.
The housebuilder said it had carried out a “root-and-branch review” of its procedures and implemented some changes to ensure further mistakes in cost reporting would not happen. It cut 200 jobs after simplifying its businesses in late 2023 and paid out less in bonuses last year as profit targets were not met.
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Vistry spent more on building safety repairs – £114.7m compared with £19.3m in 2023. The government ordered housebuilders to replace unsafe cladding and carry out other repairs at their high-rise blocks after the Grenfell Tower fire in 2017. Vistry set aside an extra £117.1m for 41 buildings after regulatory changes.
The Hargreaves Lansdown analyst Aarin Chiekrie said 2024 had been “a year for Vistry investors to forget”, with its share price crumbling by more than a half over the past 12 months. “Performance is expected to improve as the year progresses, but given its recent series of missteps, management will have to start delivering more good news if they want to rebuild investors’ confidence,” he said.
