Housebuilder issued third profit warning in as many months on Christmas Eve
Broker Investec has questioned whether housebuilder Vistry will meet its medium-term targets in the wake of three profit warnings last year.
The firm issued its third warning in as many months on Christmas Eve which Investec called “an unexpected nasty surprise”.
It added: “The most recent profit warning capped a very poor end to 2024 for the Group. It also makes us question further what the credible medium-term targets for the Group are, in terms of timing but also quantum of profits.
“We cut our estimates in line with the revised guidance and remain cautious ahead of more information and clarity on the operational and financial position of the Group and its medium-term delivery priorities and targets.”
The housebuilder, which is set to become the biggest by number of homes built this year, said pre-tax profit will be £50m less than previously expected when it announces its 2024 numbers in the spring.
Vistry now expects pre-tax profit for 2024 to be around £250m, meaning it has cut its pre-tax profit forecast by more than 40% since October last year.
Investec added: “There looks to be increased risk of the Group reining in its medium-term targets in terms of quantum and timing – what is the credible deliverable rate of growth of the group and what will the balance sheet look like?”
Explaining the original profit warning in October, Vistry said the cost of completing nine schemes in the South region would be 10% higher than expected.
>> See also: How worried should the industry be about Vistry?
The issues were blamed for the second profit warning the following month – which also saw the firm announce chief operating officer Earl Sibley would be leaving at the end of last year – and in the Christmas Eve update, Vistry said the latest fall was “primarily due to delays to expected year-end transactions and completions”.
It added: “The Group has seen a number of agreements with its partners which were expected to complete in FY24 take longer to conclude, and now expects these transactions to complete in FY25.
“In addition, the Group has chosen not to proceed with a number of proposed transactions where the commercial terms on offer were not sufficiently attractive. The Group believes more attractive options will be available in FY25. We have also seen a delay to some open market completions expected in FY24 which has, to a lesser extent, contributed to the profit impact.”
It is expected to make a further update in a scheduled trading statement next week ahead of its annual results being released on 6 March.
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