Vistry Group’s Value Plummets Amidst Profit Warning
The UK’s housing market has taken a significant hit as Vistry Group, a leading housebuilder, has issued its third profit warning in as many months. The company’s value has plummeted by over £430m, with investors pulling hundreds of millions from the business. This drastic drop is attributed to delayed deals with partners and incomplete developments.
Delayed Deals and Incomplete Projects
Vistry Group, which builds over 17,000 homes annually in the affordable and rental markets, has cited delays in transactions expected to close in 2025 rather than this year as a major contributor to its financial woes. Furthermore, the company has scrapped several proposed deals due to unattractive commercial terms, opting to wait for more appealing options to emerge next year.
Stock Prices Take a Hit
As a result, Vistry Group’s shares have dropped by around 40% since the start of 2024, with its stock currently trading at its lowest point in two years. The news has also had a ripple effect on rival housebuilders, with Crest Nicholson’s shares down by 2% and other listed rivals experiencing slight declines.
Turbulent Few Months
This profit warning marks the third in a series of financial setbacks for Vistry Group, which has already faced issues with miscalculated building costs in its South division. An external review revealed 18 sites with cost calculations off by more than £1m, resulting in an additional £8m dent to its profit.
External Factors Compounding Woes
Anthony Codling, an analyst at RBC Capital Markets, believes that the Chancellor’s Budget has exacerbated Vistry Group’s problems by causing local authorities and partners to slow down their purchasing decisions. Higher-than-anticipated mortgage rates have also played a role in the company’s struggles. Economists have attributed the recent surge in borrowing costs to Rachel Reeves’s Budget, which has driven up UK 10-year bond yields to their highest levels in a year.
Looking Ahead to 2025
Greg Fitzgerald, Vistry Group’s executive chairman and chief, has acknowledged the challenging past few months and expressed his commitment to rebuilding profitability in 2025. The company’s top priority for the new year is to continue delivering high-quality, mixed-tenure homes and addressing the country’s acute housing shortage.
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