Vistry has further reduced its profit forecast citing understated costs.
- Initially, Vistry cut £115m from its projected profit due to unforeseen project costs.
- An additional £50m reduction was announced following extensive reviews of their operations.
- Key multi-phase projects in the southern division largely impacted cost adjustments.
- Vistry’s share value experienced a significant drop following these revelations.
Vistry, a prominent player in the construction industry, has announced a further £50 million reduction to its profit forecast. This decision comes after the company unearthed more “understated costs” across its operations. This marks a continuation from the previous adjustment, where the firm had already reduced its projected profits by £115 million over the next three years, primarily owing to higher than anticipated costs in its southern division’s projects.
According to Vistry, the latest revisions are informed by both independent and internal evaluations. These assessments identified underestimated costs across various projects, pointing to a broader issue of control rather than specific cost categories. Notably, the cost estimations for 18 different sites in the southern region were substantially off, with five major multi-phase projects contributing to approximately 60% of the total adjustments.
The financial implications of these discoveries were immediately felt on the stock market, with Vistry’s share price plummeting by 18.83% on the day of the announcement. The company has updated its expectations to achieve around £300 million in adjusted profit before tax in 2024, with plans to complete 17,500 units at an average selling price comparable to the previous year.
Despite the setback, Vistry maintains a robust forward sales position of £4.8 billion. However, the organisation acknowledges that stabilising its operations, particularly in the south division, alongside navigating prevailing market conditions, will be crucial for its growth in 2025. Adrian Lunn, director at Eddisons, highlighted the urgency for Vistry to address these challenges to regain investor trust and secure a stable future.
“Vistry’s trading update highlights the ongoing challenges for the housebuilder, especially following the October profit warning,” said Lunn. He emphasised the critical nature of demonstrating that these cost management issues were isolated incidents related to the southern region to re-establish confidence in the company’s strategic direction.
Vistry faces a challenging path ahead, requiring immediate attention to cost management and strategic adjustments.
