UK Housebuilder Vistry expects a £40m hit to its profits and the loss of 200 jobs as it closes its struggling private housebuilding arm to concentrate exclusively on affordable housing.
Last month, Vistry revealed plans to merge its housebuilding division with its affordable homes business partnerships, through which it works with local government and housing associations to build lower-cost homes.
In its latest trading update today the company estimates the FY23 impact of the reduction in full year site margins to be in the region of £40m and as a result, the group’s targeted FY23 adjusted profit before tax, including this impact, is £410m.
AJ Bell investment director Russ Mould comments on Visty’s latest trading numbers.
“Vistry has outperformed its housebuilding peers in 2023 as its acquisitions-bolstered partnerships business provided it with a more resilient revenue stream amid a pronounced housing market downturn.
“Big exposure to regeneration and affordable housing is undoubtedly a plus but today’s update reveals there are limits to the protection this can provide”.
Mould says the lack of a seasonal pick up in its private housing business at least demonstrates the wisdom of the decision to retrench from this market but that it is still a shock to learn it is performing below even the group’s own modest expectations.
“For now, Vistry is sticking with its full-year forecasts, however there may be some nervousness in the market that today’s gloomy update is a precursor to an eventual profit warning.
The share price of rival housebuilders pulled lower in early trading in the wake of Vistry’s gloomy assessment of market conditions.
