Housebuilder Vistry (VTY) swung to a first-half loss following the impact of lockdown on the construction sector, though it also noted production was back to near normal levels.
Investors marked the shares down 3.85% to 611p as they focused on the losses and the company’s balance sheet, which is more stretched than many of its peers thanks to the acquisition of Galliford Try’s (GFRD) housebuilding and regeneration businesses. A £1.1 billion deal which completed in early 2020 before the Covid-19 pandemic.
Although net debt had come down from £476 million in May it still stood at £357.3 million at the end of June, 12 months earlier the company was sitting on net cash of £102 million.
Pre-tax losses for the six months to 30 June amounted to £12.2 million, compared to a profit of £72.5 million for the same period a year ago.
PLAN TO RESUME DIVIDENDS IN 2021
Revenue rose 5% to £606.4 million following the completion of the company’s acquisition of Linden Homes in January. Vistry said it expected to post a pre-tax profit for the full year of £130-£140 million.
It added that it ‘has the ability’ to deliver at least £310 million of pre-tax profit in 2021, assuming stable pricing, sales rates and productivity levels.
The company said it was aiming to resume dividends in respect of 2021 with a progressive dividend policy thereafter. The sales rate since 1 July was up 20% up year-on-year, at 0.73, while forward sales were at a record £2.7 billion.
Numis analyst Chris Millington noted that the sell-off in Vistry shares had been ‘exacerbated by Vistry's higher than average leverage’ adding: ‘In keeping with the other housebuilders, Covid has impacted Vistry’s short-term financials hard, but it does appear the group is emerging from this exceptional situation faster than most.’
