Firm says build costs will be down after asking suppliers for 10% price cut last year
Vistry is on track to deliver nearly 2,000 more homes than last year, with “robust” demand for affordable homes vindicating the firm’s decision to target partnership work.
According to a trading update published this morning, the group is on track for more than 18,000 completions in this year, an increase of more than 10% on the 16,118 finished in 2023 and up from its previous expectation of 17,500 units.
It predicted half-year and full-year profit would be ahead of last year, when it recorded pre-tax profit of £305m, and said it remained confident in achieving £800m operating profit in the medium term.
Building 18,000 homes would see Vistry exceed the 17,200 figure completed by Britain’s largest housebuilder Barratt last year.
Vistry also said it would “benefit from lower year on year building material costs in FY24 reflecting engagement with our supply chain throughout 2023”.
The firm sparked an outcry after it wrote to contractors last year to ask for a 10% price cut with the business saying it would lead to greater efficiency and more work in the longer term for contractors.
In an interview with Building earlier this year, Fitzgerald admitted many partners were initially furious.
“Week one it was basically ‘Fuck off, I’m not putting any more money in Greg Fitzgerald’s pockets. No way, not a chance’.
“Week two they’ve had a call from another housebuilder saying they’re stopping a development. Ok, they’ll come in for a chat. Week three, they’re offering a discount. By week five they’re now scrambling to maybe give us more because they want that work.”
>>See also: ‘I’m extremely demanding’: Greg Fitzgerald on delivering the Vistry growth plan
Vistry last September announced a major strategic move, merging its traditional housebuilding arm into its partnerships business and subsequently announcing a series of large “portfolio deals”.
“The group has had a good start to the year with our unique Partnerships model clearly demonstrating its market resilience,” said Greg Fitzgerald, chief executive of Vistry.
He said the anticipated growth in profit and completions was “underpinned by our strong forward sales position”, which totals £4.9bn, up 10% on the same position last year.
“We remain confident in our differentiated strategy and are making good progress towards our medium-term targets,” he added.
Vistry executives believe the partnerships model, in which developers work to build homes for long-term investors, often in the public sector, will eventually allow it to build 25,000 homes per year.
The trading update said Vistry was continuing to see “attractive partnership opportunities” that meet its requirements for a minimum of 50% of units to be partner-funded, with a 40% return on capital and more than 12% operating margin.
The group has secured new land and development opportunities totalling 6,037 mixed-tenure new homes across 19 developments in the year to date.
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