Vistry Group to cut 200 jobs as profits slide

Vistry has slashed full-year earnings expectations and warned of job cuts after the housebuilder’s sales continued to slow since the summer.

The Kent-based property developer is now aiming for an adjusted pre-tax profit of £410million for the 2023 financial year, £40million lower than its previous target of £450million.

This reflects the re-evaluation of margins on its sites after selling more homes in its housebuilding division at discounted prices and through pre-sale offers, the firm said.

In September, Vistry announced it was merging the segment with its Partnerships business in order to focus on addressing the UK’s colossal under-supply of mixed-tenure, affordable homes.

Under the restructuring, the group plans to reduce the number of regional business units from 32 to 27, and make around 200 employees redundant.

About £25million in annualised costs are expected to be saved by the tie-up, which will see Vistry retain the Countryside Partnerships, Bovis Homes, Linden Homes and Countryside Homes brands. 

Vistry told investors: ‘The ongoing acute need for affordable mixed tenure housing across all areas of the country continues to drive demand, and we have received positive endorsement of our strategy from a wide range of our partners.

‘Increasing the supply of affordable and sustainable homes through our Partnerships model is at the core of Vistry’s purpose and gives us confidence in delivering on our medium-term targets.’

However, the company reported that open market private sales, having slowed down significantly over the summer, had unexpectedly failed to improve during September and October.

Since July, its average weekly sales rate has been 0.60 per outlet, against 0.64 in the equivalent period last year. For the year to date, the comparative figure remained relatively flat at 0.76 per week.

Britain’s property market is being weighed down by rising mortgage costs caused largely by the Bank of England hiking interest rates on 14 consecutive occasions to try and dampen elevated inflation levels.

Problems were partly compounded by former Prime Minister Liz Truss’s controversial mini-budget in September 2022 causing widespread panic among potential homebuyers.

Although borrowing costs have dropped somewhat this year, an average two-year fixed-rate mortgage currently stands at 6.43 per cent, while an equivalent five-year deal is 5.97 per cent, according to financial information provider Moneyfacts.

Commenting on Vistry’s results, Russ Mould, investment director at AJ Bell, said: ‘Big exposure to regeneration and affordable housing is undoubtedly a plus, but today’s update reveals there are limits to the protection this can provide.

‘The lack of a seasonal pick up in its private housing business at least demonstrates the wisdom of the decision to retrench from this market, but it is still a shock to learn it is performing below even the group’s own modest expectations.’

Vistry Group shares slumped by 6 per cent to 681.5p on Monday morning, making them the biggest faller on the FTSE 250 Index.