Vistry Group, one of Britain’s biggest housebuilders, has cut its annual profit expectations after half-year losses ballooned as it grappled with a £600m pile of unsold homes.
Adam Daniel, the new chief executive of the Bovis Homes and Countryside owner, insisted “the issues can be fixed” as he set out a detailed turnaround plan that involves pulling out of private sales in south-east England and slimming operations to turn Vistry into a more focused, 12,000-homes-a-year builder.
Further job losses loom, however, after Vistry announced new cost savings of £50m, on top of a £25m voluntary redundancy programme and hiring freeze earlier this year. It said it reduced its workforce to 4,150 at the end of July, with 350 people leaving since the summer, according to PA. The company is closing some regional offices, moving from 25 to 12 regions.
Vistry reported a loss before tax of £661.3m for the first six months of the year, versus a profit of £40.9m the year before, dragged back by a £475m writedown and a £73m provision for building safety works.
For the year as a whole, it now expects to post an adjusted profit before tax of £165m, after making an adjusted loss of £83.3m in the first half, far worse than expected.
The company completed 6,304 homes, down by 8% from a year earlier. After resorting to steep discounts to sell a £600m pile of houses, it is now left with £220m of unsold properties. In July it said the average discount offered to homebuyers was 7.1%. Half-year revenues fell by 9% to £1.7bn while Vistry’s debt jumped from £293.1m to £468.8m.
Vistry blamed “disappointing summer sales of private homes” and withdrawals or renegotiation of deals to build affordable homes. It has also been hit by cost inflation of 3% to 4% as a result of the Iran war, which has driven fuel prices sharply higher.
In August, the company received £350m funding from the government to construct 3,000 affordable homes, the largest slice awarded under the £39bn social and affordable homes programme, and it is one of 33 strategic partners that take part. Vistry said it had already started building those homes.
Daniels, who took the helm in April, laid out measures such as reducing the land bank from 51,000 to 36,000 plots and a reorganisation of the business, simplification of product range, brands and operating processes, and greater exposure to the north, Midlands and west of England.
Daniels said: “We have made substantial progress in refocusing the business and delivering on our immediate priority to improve cash generation. In parallel, we have now completed an extensive review of our business and operating model including how best to position the group for future success.”
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The Vistry share price plunged more than 8% in early trading.
Victoria Scholar, the head of investment at Interactive Investor, said: “The housebuilder has been faced with macro headwinds from this year’s energy shock leading to cost pressures, weaker affordability and consumer confidence amid the higher-for-longer interest rate backdrop.
“Shares had already had a painful run lately, shedding close to 60% year-to-date before this morning’s further sharp slide, underscoring the challenges at hand for its boss and the need for a drastic turnaround.”
