Vistry shares dipped on Wednesday after the house builder revealed the damage caused by costing errors last year, pausing dividends as a result.
Investors should not be surprised that Vistry has decided to scrap its final dividend after a string of profit warnings last year. Nonetheless, the news wasn’t taken well by the market, and shares were down over 6% at the time of writing.
Cost miscalculations at several sites in the South of England led to dramatic revisions of profit forecasts last year, which were confirmed in today’s full-year results.
“2024 was a year for Vistry investors to forget and by management’s own account, the group significantly underperformed financially in year, with several profit warnings causing the share price to crumble by more than half,” said Aarin Chiekrie, equity analyst, Hargreaves Lansdown
Profit before tax sank 35% compared to the prior year’s restated results on an adjusted basis and 64% on a reported basis. The results are nothing short of a catastrophe for the company after they started 2024 so well.
However, that’s now all largely priced in, and a 7% increase in completions will have provided some solace.
Investors would have been keen to see how the company performed in the early part of 2025, and unfortunately, the company’s performance in the first quarter so far has been disappointing.
Sales rates are falling and the order book has shrunk.
“2025 hasn’t got off to the best of starts either, with sales rates down significantly year-to-date as partner-funded transactions have pulled back,” Chiekrie explained.
“More recent government announcements have offered a glimmer of respite from the bad news, with an additional £2bn of funding promised for the affordable housing programme. This aligns well with Vistry’s strategy, which focuses on increasing volumes of affordable housing for UK buyers. Performance is expected to improve as the year progresses, but given its recent series of missteps, management will have to start delivering more good news if they want to rebuild investors’ confidence.”