Vistry completes round of price cuts with suppliers and says it will beat expected profit figure

Vistry has said it has agreed the price cuts it asked for with its suppliers last autumn with the firm adding that it expects to make more money than it previously predicted.

The housebuilder hit the headlines for writing to contractors to ask for a 10% price cut. Vistry boss Stephen Teagle later defended the move, telling Building it would lead to greater efficiency and more work in the longer term for contractors.

In a trading update issued this morning, the firm said: “The group has proactively managed its costs during the year and, working with our key supply chain partners, agreed cost reductions for all existing and future contracts in the second half.

“This reflects both improving market conditions on costs and the benefits to the group from its scale, its growth strategy, and the high level of visibility on forward sales and build programmes under the partnerships model which offers greater continuity of work to our suppliers.”

Vistry said it is on course to post adjusted pre-tax profit of around £418.4m for the year to 31 December, ahead of the £410m guidance stated three months ago.

This means its adjusted pre-tax profit is in line with last year’s performance and comes despite previously saying its merging of its housebuilding arm into its partnerships business and cutting five regional will hit its adjusted profit in 2023 by £40m.

Vistry completed 16,124 units in 2023, down by 5.4% year-on-year. The firm last year announced an ambition to ramp up development to 25,000 homes a year under its new partnerships strategy and said it can build 20,000 homes a year in the short-term.

The housebuilder also announced a series of changes to its non-executive team today. Ralph Findlay is standing down as chair after nine years, and will be replaced by Vistry boss Greg Fitzgerald, who will serve as both chief executive and executive chair.

Jeff Ubben is standing down from the board while Usman Nabi, managing partner and chief investment officer at Los Angeles-based investment firm and Vistry shareholder Browning West, will join.

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Non-executive Chris Browne will also step down from the board in May with the group looking to recruit two further board members.

Vistry said its forward sales position has increased 12.4% year-on-year, standing at £4.5bn. It said its transition of its former speculative housebuilding landbank to the partnerships model is making good progress and new partnerships and pre-sale agreements are ‘progressing well’. Vistry in November announced an £819m deal to pre-sell nearly 3,000 homes to Leaf Living and Sage Homes.

But Vistry’s adjusted revenues are down year-on-year from £4.46bn in 2022 to £4bn in 2023, while its average selling price has fallen from £289,000 to £277,000.

The housebuilder said its timber frame business delivered 2,500 units in the year and it expects this to double in 2024 as it moves towards a target of producing 7,000 units a year from its three factories.