8th Oct 2024 08:59
(Alliance News) - Vistry Group PLC share price dropped by almost a third on early Tuesday after the housebuilder reduced in its full-year profit guidance, due to an understatement of development costs.
Share in the Kent, England-based company fell 29% to 909.67 pence each in London on Tuesday morning. The stock remains up 17% over the past 12 months.
Vistry said total full-life cost projections for completing 9 out of 46 developments in its South Division, including some large-scale schemes, have been understated by around 10% of the total build costs.
The South Division is one of six divisions in the UK for Vistry, which has 300 developments in total across the group.
The increase in potential costs means a reduction in Vistry's guidance for adjusted pretax profit. This was cut by 19% to around GBP350 million for 2024 from GBP430 million previously. Adjusted pretax profit in 2023 was GBP419.1 million on revenue of GBP4.04 billion.
Vistry also reduced its 2025 profit forecast by around GBP30 million and its 2026 forecast by around GBP5 million. Vistry didn't provide the actual 2025 and 2026 forecasts in its statement on Tuesday, just the amount of their reduction.
Vistry emphasised that the cost issues are confined to the South Division only. It is currently making changes to the south division management team and will launch an independent review to fully understand the causes.
"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 GBP800 million adjusted operating profit and GBP1 billion of capital distributions to shareholders," the company said.
Vistry expects to deliver more than 18,000 unit completions in financial 2024 and remains committed to the GBP130 million share buyback programme it announced in early September.
The company is due to release a trading update on November 8.
By Emily Parsons, Alliance News reporter
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