Vistry share price tumbles after profit warning

The housebuilder Vistry has warned shareholders that it is facing a £115 million hit after it understated the cost of building nine developments.
The FTSE 100 group said in an unscheduled announcement that the total build costs, including some large projects, had been understated by its south division by about 10 per cent.
“The estimated one-off impact of adjusting for the revised development cost assumptions reduces the board’s expectations for adjusted profit before tax for 2024 by £80 million, by £30 million for 2025 and by £5 million in 2026,” the company said.
Vistry now expects full-year adjusted pre-tax profit for 2024 of around £350 million. This compares with an adjusted pre-tax profit of £419.1 million last year and City analysts’ expectations of £428 million this year.
Shares in the housebuilder dropped 30 per cent, or 381p, to 892p in early trading.
“We believe the issues are confined to the south division and changes to the management team in the division are underway,” the housebuilder said. “We are commencing an independent review to fully ascertain the causes.”
At its half-year results last month, the company reported a 7 per cent rise in adjusted pre-tax profit to £186.2 million in the six months to the end of June, boosted by resilient demand for its affordable homes from housing associations and the rental sector.
Last year the FTSE 100 developer switched to building homes for housing associations and local authorities in anticipation of government help to reduce the lack of affordable homes in the country.
The company, which can trace its roots back to the 1800s, was formed by the merger of Bovis Homes and the housebuilding division of Galliford Try in 2020. Most recently, the company acquired Countrywide, another partnerships builder.
Vistry said it still expected to complete more than 18,000 homes in 2024 and was committed to the £130 million share buyback programme announced in September.
The company said: “The group is confident in its unique partnerships strategy. Notwithstanding the one-off adjustment announced today, we remain committed to delivering a strong increase in high-quality mixed tenure housing, our medium-term target of £800 million adjusted operating profit, and £1 billion of capital distributions to shareholders.”