Housebuilder Vistry pins hopes on £2bn affordable homes injection as profits fall
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 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.
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.
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.
Vistry also spent more on building safety repairs – £114.7m compared with £19.3m in 2023. The government ordered housebuilders to replace faulty 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.
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The Investec analyst Aynsley Lammin said there were 'no big incremental negative surprises' in the results. He added: '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.'
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