Vistry shares rose on Wednesday after the house builder said they were on track to meet recently reduced profit guidance, providing hope that the worst of the cost miscalculation saga is behind them.
Stripping out the impact of provisions for underestimating the costs at a number of their sites, Vistry had a fairly reasonable year. Completions are set to rise 7% to 17,200, and revenues are projected to increase 9% to £4.4bn.
However, the problems with Vistry haven’t been the sales; it’s been with the management of costs that investors will still have reservations about despite the upbeat assessment of sales and completion activities.
“After delivering three consecutive profit downgrades in the three months prior, Vistry has finally broken its streak of bad news. The trading update wraps up a truly disastrous 2024 for the group, where despite new home completions and revenue rising, profits have been on a downward spiral,” said Aarin Chiekrie, equity analyst, Hargreaves Lansdown.
“That’s largely down to the group’s strategy shift to a Partnerships-only model, where it teams up with local authorities and housing associations.”
“These partners foot most of the bill, freeing up Vistry to deploy its cash on more projects. That’s seen the group chase faster-than-average growth, but a series of managerial missteps and accounting issues that have led to profit downgrades have raised serious questions about the new structure and internal controls.”