Vistry’s profit drops by nearly two-thirds as impact of cost estimation errors revealed

Vistry’s pre-tax profit has fallen by nearly two-thirds as the full impact of cost forecasting errors in its southern division were outlined in its annual accounts today.

The housebuilder, in its results to the year to 31 December 2024, reported pre-tax profit of £105m, a drop of 64% on the £293m reported the previous year. Its operating profit excluding one-off costs fell from £407m to £263.5m.

Vistry said the performance was “significantly below” its expectations at the start of the year, although its operating profit was slightly better than the £250m it guided in January.

The group’s widely-publicised cost forecasting problems in its southern division have had a £165m impact, with a £91.5m impact on operating profit in 2024 and £53m in future years.

The housebuilder increased its turnover 7% from £4bn to £4.3bn and also boosted its completions 7% from 16,118 to 17,275.

Vistry has continued its shift from a “higher margin, capital intensive” speculative housebuilding model to partnerships, which are lower margin but capital light.

Nearly three-quarters of its completions in 2024 were ‘partner-funded’ – meaning the homes are funded by housing associations, local authorities, or build-to-rent (BTR) investors – compared to 68% the year before.

Vistry also said the government’s announcement of an extra £2bn in funding for affordable homes, alongside recent top-ups to the current Affordable Homes Programme totalling £800m, “will drive investment momentum across the affordable housing sector”.

It added: “As a strategic partner to Homes England, Vistry will apply for an allocation of this top-up affordable housing grant.”

Vistry increased its building safety provision by £117m in 2024 and expects net annual cash cost of building safety to be £65m this year.

It said: “This increase reflects a rise in third party claims due to the implementation of regulatory changes, which has broadened the types of issues that are now considered a risk to occupant safety, as well as an increase in the historical time period for which the developer has a responsibility.”

It added the group has identified an additional 41 buildings requiring remediation.

>>See also: How worried should the sector be about Vistry?

The cost of forecasting errors in Vistry’s southern division has led to widespread restructuring at the group since they were first brought to public attention in multiple profit warnings from the housebuilder last year.

In November, Vistry announced the departure of chief operating officer Earl Sibley as his role was axed to give chief executive Greg Fitzgerald ‘closer proximity’ to the business.

The group’s divisional structure has also been consolidated from six divisions into three, each with an executive chair with extensive partnerships experience reporting to Fitzgerald.

Four regional businesses in the former south division have been separated across two of the three new divisions, with two regional businesses in each.

The group said it has carried out a review of its commercial procedures and controls in a bid to try and prevent further cost reporting errors.