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UK housebuilder Vistry expects a stronger second half of the year despite forecasting a first-half pre-tax loss of GBP 30 million (USD 40 million). The company has outlined a strategic overhaul led by Chief Executive Adam Daniels, focusing on cost reductions, lower land purchases, a smaller regional footprint and the discontinuation of part-exchange operations to improve profitability and reduce debt. While first-half completions declined to around 6,100 homes due to delays in partner-funded developments, Vistry maintained its full-year adjusted profit guidance of GBP 200 million. The builder also expects to end the year with net cash exceeding GBP 100 million, supported by higher open-market sales, investment partner projects, government affordable housing grants and the impact of its restructuring programme.
Britain's largest affordable housing developer, Vistry, has forecast a first-half pre-tax loss of GBP 30 million (USD 40 million) while expressing confidence that a strategic restructuring programme will improve financial performance during the second half of the year. The trading update, released in the past week, comes as the company continues to implement cost-saving measures under Chief Executive Adam Daniels, who assumed the role three months ago.
The announcement prompted a sharp market reaction, with Vistry's shares falling by as much as 12%, making it the weakest performer on the FTSE mid-cap index, which declined by more than 2% during morning trading.
The restructuring programme is intended to reduce debt and align the business with current market conditions. As part of the plan, Vistry will reduce its regional footprint, scale back its land bank and lower land acquisitions. The company will also discontinue its part-exchange business, under which homeowners could use their existing property as part payment when purchasing a new home.
Earlier this year, Vistry had cautioned that interim and full-year earnings would be significantly lower than previously expected, citing the impact of higher material and labour costs linked to the Iran conflict and weaker consumer confidence, both of which have affected housing demand and operating margins.
Operationally, the builder completed around 6,100 homes during the first half of the year, compared with 6,889 homes in the corresponding period a year earlier. The decline was attributed to delays in partner-funded developments after certain projects were renegotiated because they did not meet commercial requirements. The company said several of these developments are expected to be completed during the third quarter.
Despite the weak first-half performance, Vistry maintained its guidance for adjusted full-year profit of GBP 200 million, broadly in line with market expectations. The outlook reflects the company's expectation of stronger trading in the second half, supported by its ongoing restructuring programme.
The company reported net debt of GBP 470 million as of June 30 but said it expects to end the year with net cash exceeding GBP 100 million. Vistry also anticipates benefiting from the confirmation of UK government affordable housing grants expected in September. The second-half performance is projected to be supported by stronger open-market sales, higher volumes of homes delivered through investment partners and savings generated through the restructuring programme.
Vistry is scheduled to announce its half-year financial results in September. The company also confirmed that Chief Financial Officer Tim Lawlor will leave to take up another position. He will remain with the business until October, after the completion of the chief executive's strategic review and the publication of the half-year results.
Source - Reuters
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