Vistry ups profit outlook despite supply chain and cost pressures

Housebuilder Vistry has increased its full-year profit outlook for the second time in less than four months despite rising construction costs and supply chain woes.

The group – formerly called Bovis Homes – said it now expects underlying full-year profits of about £345 million, having already raised the outlook in mid-May from initial estimates of £310 million as the market boomed ahead of the stamp duty holiday deadline.

It made the announcement as results revealed it swung to a statutory pre-tax profit of £156.2 million for the six months to June 30 from losses of £12.2 million a year ago.

But it became the latest firm in the sector to warn over delays from difficulties in securing materials amid a mounting supply chain crisis, which is pushing up prices.

Vistry gave assurances that the supply problems are being “well managed”, with increases in house prices more than offsetting build cost inflation.

The group said: “The significant step up in production across the industry has led to some pressure on the materials supply chain, resulting in extended lead times and inflationary pressures on certain products.

“Working in close partnership with our suppliers, we have actively managed this ongoing situation.”

It added: “The supply agreements entered into at the formation of Vistry Group are delivering an enhanced service and providing some protection against cost inflation thanks to our enlarged scale and buying power.”

Rival Barratt Developments said last week that build cost inflation is currently running at between 4% and 5% and is likely to continue at that rate over the financial year to next summer.

It blamed wider industry supply issues and soaring demand, as well as skilled labour shortages, which are pushing worker wages higher.

But margins in the sector are so far being protected by surging property prices, with Vistry confirming its average private selling price rose to £351,000 from £332,000 a year earlier.

Separately, figures out on Tuesday from Halifax revealed that the average UK property price hit a record high of £262,954 in August, rising 0.7% month on month.

However, it said annual house price inflation slowed to a five-month low of 7.1% last month as the market shows some signs of cooling following the ending of full stamp duty holiday relief on June 30.