Vistry Group, a major British housebuilder operating under the Bovis Homes and Countryside brands, announced a significant downward revision of its full-year profit forecast following substantial first-half losses. The company reported a loss before tax of £661.3m for the first six months of the year, compared with a profit of £40.9m in the equivalent period last year. The deterioration was attributed to a £475m writedown and a £73m provision for building safety works. The company now expects adjusted profit before tax of £165m for the full year, having recorded an adjusted loss of £83.3m in the first half.
The housebuilder has been burdened by significant unsold inventory, with £600m worth of homes requiring steep discounts to move. Homes were being offered at an average discount of 7.1% in July. Despite these efforts, £220m of properties remained unsold at the time of the announcement. The company completed 6,304 homes during the period, representing an 8% decline from the prior year. Half-year revenues fell 9% to £1.7bn while debt increased substantially from £293.1m to £468.8m.
Chief Executive Adam Daniel, who assumed leadership in April, introduced a comprehensive turnaround strategy aimed at restructuring the business. The plan includes exiting private sales operations in south-east England, reducing the land bank from 51,000 to 36,000 plots, and repositioning the company as a 12,000-homes-a-year builder with greater geographic focus on the north, Midlands, and west of England. Additional operational changes involve streamlining product offerings, consolidating regional operations from 25 to 12 regions, and simplifying organizational processes.
Cost pressures from external factors have contributed to the company’s challenges. Vistry cited cost inflation of 3% to 4% resulting from geopolitical tensions affecting fuel prices. The company also identified weak summer sales in the private sector and withdrawals or renegotiations of affordable housing contracts as challenges. Workforce reductions are continuing, with 350 employees departing since July following an earlier £25m voluntary redundancy program and hiring freeze. An additional £50m in cost savings has been announced.
Despite the difficulties, Vistry secured £350m in government funding during August to construct 3,000 affordable homes under a £39bn social and affordable homes program. The company indicated construction on these homes has already commenced. Share price declined more than 8% following the announcement, reflecting investor concerns about the turnaround prospects amid broader economic headwinds affecting the residential construction sector.
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