Vistry Group to cut 200 jobs as profits slide

Vistry cut full-year profit expectations and warned of job cuts after the homebuilder’s sales continued to slow since the summer.

The Kent-based property developer is now targeting adjusted pre-tax profits of £410 million for the 2023 financial year, £40 million lower than its previous target of £450 million.

This reflects the revaluation of margins at its sites following the sale of more homes in its residential division at discounted prices and through pre-sale offers, the company said.

Property developer Vistry Group now targets adjusted pre-tax profits of £410 million for the 2023 financial year, £40 million lower than previous target

In September, Vistry announced it was merging the segment with its Partnerships business to focus on tackling Britain’s massive affordable housing shortage.

As part of the restructuring, the group plans to reduce the number of regional business units from 32 to 27 and lay off approximately 200 employees.

It is expected that around £25 million in annualized costs will be saved from the partnership, which will see Vistry retain the Countryside Partnerships, Bovis Homes, Linden Homes and Countryside Homes brands.

Vistry told investors: ‘The continued acute need for affordable mixed-use housing in all parts of the country continues to drive demand, and we have received positive support for our strategy from many of our partners.

‘Increasing the supply of affordable and sustainable housing through our Partnerships model is at the heart of Vistry’s purpose and gives us confidence in achieving our medium-term goals.’

However, the company reported that private open market sales, which had slowed significantly over the summer, unexpectedly failed to improve in September and October.

Since July, average weekly sales per point of sale are 0.60, up from 0.64 in the same period last year. For the year to date, the comparative figure remained relatively flat at 0.76 per week.

The British property market is under pressure from rising mortgage costs, largely caused by the fact that the Bank of England has raised interest rates fourteen times in a row in an attempt to dampen high inflation.

The problems were partly exacerbated by former Prime Minister Liz Truss’ controversial mini-budget in September 2022, which caused widespread panic among potential home buyers.

Although financing costs have fallen slightly this year, an average two-year fixed rate mortgage is currently 6.43 percent, while an equivalent five-year deal is 5.97 percent, according to financial information provider Moneyfacts.

Commenting on Vistry’s results, Russ Mold, investment director at AJ Bell, said: ‘High exposure to regeneration and affordable housing is undoubtedly an asset, but today’s update shows there are limits to the protection this can provide.

‘The lack of a seasonal rebound in the private housing sector at least demonstrates the wisdom of the decision to withdraw from this market, but it is still a shock to hear that it is performing below even the group’s modest expectations. ‘

Vistry Group shares fell 6 percent to 681.5p on Monday morning, making them the biggest fallers on the FTSE 250 Index.