Vistry Group crashed to a heavy first-half loss and unveiled plans to shrink and simplify the business, as its new chief executive set out a turnaround for the troubled housebuilder.
The housebuilder doesn’t seem to be able to catch a break, and today’s defensive actions will do little to encourage investors back into the stock despite it trading near multi-year lows.
The company reported a pre-tax loss of £661.3m for the half, down from a small profit a year earlier, driven by a £475m goodwill write-down and a further £73m building-safety charge.
Even on an adjusted basis, which strips out one-offs, it swung to an £83.3m loss, as it discounted homes to generate cash and absorbed the early costs of a strategic review. Completions fell 8% and net debt rose to £468.8m from £293.1m.
Falling completions are becoming a theme across the industry, with very few housebuilders showing positive signs on this front.
Adam Daniels, who became chief executive in April, said a review of the business had confirmed that its mixed-tenure model of building affordable, partner-funded and open-market homes was sound, but that its execution and capital discipline had been inconsistent.
In response, Vistry will become smaller and more focused, cutting its annual completions target to around 12,000 homes, consolidating from 25 operating regions to 12, reducing its land bank and exiting open-market housebuilding in the South East. It has identified £50m of annual cost savings on top of £25m already flagged.
As has been well documented, open-market conditions worsened over the summer, with its sales rate slowing, though Vistry pointed to support from a new government affordable-housing programme, under which it secured the largest direct grant of £350m to build more than 3,000 homes.
Stripping out the strategic charges, it guided to full-year adjusted pre-tax profit of around £165m, and about £185m next year.
If it achieves this, Vistry shares would be at an attractive valuation. But it’s a big if for a housebuilder that has a habit of disappointing.