- Full year profit ahead of guidance
- New £100 million buyback
- Target of £800 million operating profit
Shares in Vistry (VTY) jumped 5% to a new two-year high after the housebuilder delivered better than expected annual profit and provided an upbeat outlook, supported by a new £100 million share buyback.
The shares have gained 30% so far in 2024 compared with a 0.4% rise for the mid-cap FTSE 250 index.
The positive read-across lifted other housebuilders with share gains ranging from 0.5% for Persimmon (PSN) to 1.7% for Barratt Developments (BDEV).
RESILIENT PERFORMANCE
Reported revenue for the year to 31 December 2023 increased 29% to £3.56 billion reflecting a full year of results from the enlarged group following the late 2022 combination with Countryside.
Underlying adjusted revenue declined 9% as the number of completed homes fell 5% to 16,118, but Vistry insisted this represented a ‘significant’ outperformance relative to peers.
Adjusted pre-tax profit increased slightly, from £418.4 million in 2022 to £419.1 million, ahead of guidance and consensus analysts’ estimates of £405.9 million.
Vistry delivered synergy savings of circa £50 million, ahead of the £25 million target for 2023 as the Countryside integration continued at a faster pace.
Future annualised savings remain unchanged at £60 million.
WHAT DID THE COMPANY SAY?
CEO Greg Fitzgerald commented: ‘We see high demand for mixed tenure housing and regeneration across the country and are uniquely placed to deliver on this market opportunity, helping address the country’s acute need for housing.
‘The business has started the year with a real passion and commitment to deliver on its strategy and medium-term financial targets, and we expect to make good progress during 2024.’
The company is on track to deliver strong growth in completions in 2024, targeting more than 17,500 units underpinned by a forward sales book of £4.6 billion, of which, £2.1 billion is for delivery this year.
Vistry has observed a ‘notable’ pick-up in demand from private rent sector providers in recent months while the easing of mortgage borrowing costs has had a positive impact on Open Market demand.
CAPITAL LIGHT MODEL / INCREASED DISTRIBUTIONS
The group continues to transition to the Partnership model. A core principle of the model requires a minimum 50% of the homes on each development to be pre-sold to a partner. Vistry is targeting around 65% of homes across the group to be pre-sold.
This capital light model will allow the group to return capital to shareholders. Vistry expects to have a net cash position by the end of 2024 and the board will consider additional special distributions throughout the year.
The company said it is confident in achieving 40% return on capital employed, and £800 million operating profit in the medium term as well as returning £1 billion of capital to shareholders over the next three years.
