UK's Vistry warns on profit and says will slow down house-building
Vistry's Profit Warning and Strategic Response
By Raechel Thankam Job
Profit Outlook and Construction Slowdown
May 13 (Reuters) - Britain's largest affordable housing builder Vistry warned of lower annual profit on Wednesday and said it will slow the pace of construction given the economic impact of the Iran War, knocking its shares to a more than 14-year low.
Measures to Boost Cash Flow and Cut Debt
It said measures to boost cash flow and cut debt, including pausing buybacks, slowing construction, tightening land-buying criteria and increasing incentives, were likely to drag first-half profit significantly below that of previous years.
Vistry expects full-year adjusted profit before tax toward the middle of analysts' forecasts of 168 million to 283 million pounds ($383.07 million), implying a decline from last year's 268.8 million pounds.
Leadership and Operational Review
CEO Adam Daniels, who took office last month, is also conducting a review of operations after months of subdued demand and doubts over its partner-funded model.
Vistry said the findings would be made public at the time of the company's interim results in September.
Broader Industry Slowdown
Industry-Wide Challenges
BROADER INDUSTRY SLOWDOWN
Vistry's downsizing on land targets reflects a broader industry slowdown.
Berkeley has also warned of slower profit growth through 2030 and paused land purchases, while Barratt Redrow and Taylor Wimpey have trimmed land approvals.
Margin Pressure and Rising Costs
Housebuilders are bracing for a prolonged period of margin pressure as a result of rising energy and material costs, alongside renewed risks of higher interest rates that could reduce demand for new homes.
"The events in the Middle East have started to create some upward pressure on material and, to a lesser extent, labour prices which we expect to continue into (the second half)," Vistry said, adding it was working with suppliers to mitigate the hit.
Future Demand and Analyst Commentary
It also said it expected demand from housing partners to pick up later this year, once grant allocations under Britain's 2026 to 2036 Affordable Homes Programme are confirmed in the third quarter, skewing earnings toward the second half.
JPMorgan analyst Zaim Beekawa said Vistry's update was "disappointing given the magnitude of downgrades implied," noting that consensus forecasts had already fallen significantly since the group's full-year results in March.
($1 = 0.7388 pounds)
(Reporting by Raechel Thankam Job in Bengaluru; Editing by Rashmi Aich, Alexander Smith and Barbara Lewis)
