Vistry Shares Plunge on Third Profit Warning From Homebuilder

Vistry Group Plc shares tumbled after the UK homebuilder cut its earnings guidance for a third time in as many months, attributing the latest move mainly to delays in year-end transactions and completions.

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Published Dec 24, 2024  •  2 minute read

A crane lowers a section of roofing for a home under construction. Photographer: Chris Ratcliffe/Bloomberg Photo by Chris Ratcliffe /Bloomberg

(Bloomberg) — Vistry Group Plc shares tumbled after the UK homebuilder cut its earnings guidance for a third time in as many months, attributing the latest move mainly to delays in year-end transactions and completions.

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The firm, which ties up with housing associations to build affordable homes, lowered its pretax profit outlook for fiscal 2024 by another £50 million ($63 million) to about £250 million, according to a statement on Tuesday. It also added that it’s seen a number of agreements with its partners that were expected to complete in the fiscal year taking longer to conclude.

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Shares of the company dropped as much as 20% in early London trading, the biggest intraday loss since Nov. 8, when it issued its second warning. The stock has slid more than 60% since early September and the slump means it now trades at about 0.6 times its book value. Roughly, that indicates the company itself is worth less than the land that it owns.

Calling the outcome “disappointing,” Chief Executive Officer Greg Fitzgerald said he remained committed to “rebuild profitability.”

Vistry and other UK housebuilders endured a tough two years as high interest rates and a cost-of-living squeeze sapped demand for new homes. Initial optimism earlier this year that mortgage rates would start to decline, however, has fizzled after the new Labour government’s budget in October fanned inflation concerns. 

In October and November, Vistry had cut its pretax outlook because of the impact of costs being understated in some of its divisions.

“After a strong start to the year, 2024 has turned into something of an annus horribilis” for Vistry, Peel Hunt analysts wrote in a report, but kept their “buy” rating, saying the company’s partnership model will “win out eventually.” Royal Bank of Canada analysts said it was a combination of internal and external factors and the latest warning would be “hopefully” the final one for the year. 

Vistry also said Tuesday that it’s decided against proceeding with a number of proposed transactions where terms weren’t “sufficiently attractive.” The “delayed income” means that the firm expects closing net debt to be in the region of £200 million, it said.

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