Vistry warns over profits after understating build costs
8 October 2024, 08:44
The group said build costs for nine out of 46 developments in the southern division have been understated by around 10%.
Housebuilding giant Vistry has warned over a hit to profits after discovering higher-than-forecast build costs for nine developments across its southern division.
Shares in the group plunged by around a third after it revealed it had “recently become aware” that costs for nine out of 46 developments in the division, including some large scale schemes, have been understated by around 10%.
It is set to leave this year’s underlying pre-tax profits around £80 million lower than expected, at about £350 million – a 16% drop on the £419.1 million reported for 2023.
It will also impact profits for the next two years, with the group forecasting a hit of around £30 million in 2025 and £5 million in 2026.
Vistry – formerly known as Bovis Homes – said it has launched an independent review into the issue, adding that it is overhauling management in its southern division following the revelation.
The group said: “We believe the issues are confined to the south division and changes to the management team in the division are under way.
“We are commencing an independent review to fully ascertain the causes.”
The group’s woes had a knock-on impact on listed counterparts, with shares falling across the sector.
Charles Church owner Persimmon fell 2% in morning trading on Tuesday, with FTSE 100 rivals Taylor Wimpey and Barratt Redrow also both down 2%, while Crest Nicholson fell 3% in the FTSE 250 Index.
Vistry has around 300 developments across its six regional divisions in the UK.
It recently reported a 7% rise in half-year pre-tax profits to £186 million and said it was set to post higher profits for the full-year on expectations for it to complete more than 18,000 homes.
