- Revenue and profit light
- Final dividend scrapped
- 2024 a ‘challenging’ year
Shares in Vistry (VTY) fell 26p or 4% to 612p after the housebuilder posted sales and earnings which missed market expectations.
Last year the company lowered its guidance three times due to cost overruns on certain projects and a slowdown in partnership activity.
A ‘CHALLENGING’ YEAR
For the year to December, the group reported revenue of £3.78 billion, net profit of £74.5 million and EPS (earnings per share) of 22p.
Analysts polled by FactSet had forecast reported revenue of £4.16 billion, net profit of £168 million and earnings of 51p per share.
Total completions rose 7% to 17,225 units for the full year, with the increase coming from partnerships where completions were up by 18% to 12,633 units whereas open market completions were down by 15% to 4,592 units, although the firm said average selling prices remained firm.
The group admitted it had ‘significantly underperformed financially’ in the year due to cost issues in the South Division, which had a total impact of £165 million.
Following year-end procedures, the phasing of the impact of the South Division was adjusted to include a £20.5 million restatement to prior years, so the net impact on 2024 adjusted profit before tax was revised to £91.5 million, compared to the previously expected £105 million.
Profit was also hampered by a further building safety provision of £117.1 million, largely due to additional buildings identified as needing remediation, meaning total provisions at the end of 2024 stood at £324.4 million against £289 million a year earlier.
Reflecting its financial performance, the group decided to pass the final dividend but said it would continue with its share buyback programme.
GLIMMERS OF LIGHT
On the positive side, the FTSE 250 company said it expected to deliver improved cash generation and reduce its net debt during 2025.
Vistry is targeting a circa £200 million reduction in excess working capital in full year 2025, ‘addressing a build-up of open market stock units in full year 2024.’
Moreover, the government's commitment to inject £2 billion of new affordable homes grants alongside the £800 million of top up funding previously announced is a positive for the sector.
The company said the grant would ‘drive investment momentum across the affordable housing sector ahead of the launch of the 2026 Affordable Homes Programme.’
EXPERT VIEW
AJ Bell investment analyst Dan Coatsworth commented: ‘Having issued three profit warnings in quick succession, the market already knew Vistry’s results were going to be miserable. The headline figures speak for themselves; profit is down by a quarter, net debt has doubled and there is no dividend.
‘Saying share buybacks were in lieu of the dividend makes it sound as if investors were still treated to a handsome reward, although companies are free to decide how to return cash to shareholders.
‘Chief executive Greg Fitzgerald implies there are no more skeletons in the closet for the business and Vistry is now on the front foot. However, the outlook statement implies it will be a rocky road to recovery.
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Sabuhi Gard) and the editor (Ian Conway) own shares in AJ Bell.
