More than £1bn was wiped off the value of housebuilder Vistry on Tuesday after it said that the building costs had been “understated” on some of its projects and issued a profit warning.
The company, formerly known as Bovis Homes, saidthe total completion cost for nine of its 46 developments in its south division – including some large schemes – had been understated by 10% of the total build costs.
Vistry warned this will probably reduce profits by a total of £115m – £80m this year, £30m next year and £5m in 2026. As a result, the company now expects profits this year to come in at £350m, well below the £419m last year, after predicting a profit increase as recently as last month.
Shares slumped 28% after the announcement, making it the top faller on the FTSE 100 and wiping £1.2bn off its market value, down to about £3bn.
Vistry said it believed the issues were “confined to the south division” and that changes to the management team in that division were “under way”. It covers the south and south-east of England, Kent and the Thames Valley.
“We are commencing an independent review to fully ascertain the causes,” the housebuilder added.
The company said then that its partnership model, which brings forward developments with housing associations, local authorities and investors, had “significantly outperformed” the traditional market. Vistry, which acquired the affordable housing specialist Countryside Partnerships in 2022, announced a year ago that it would focus solely on social housing.
Vistry has a total of about 300 developments and said it still expects to complete more than 18,000 homes this year. It “remains committed” to its £130m share buyback programme.
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The Investec analyst Aynsley Lammin said: “The key issue is whether these are isolated and ‘one-off’ in nature, with the worry being that they are more systemic, and reflective of inherent risk within the group’s partnership model that could recur in the future. Given the shares have enjoyed such a strong run and that this issue has happened so soon after doubling down on the new strategy, it is likely to be hit sentiment significantly.”