9th Jul 2024 10:50
(Alliance News) - Vistry Group PLC on Tuesday welcomed building pledges by the new UK government, with the housebuilder believing its "unrivalled expertise and track record" puts it in good stead going forward.
Rachel Reeves, the new UK chancellor following the Labour party's election victory last week, on Monday confirmed the UK national planning policy framework will be reformed, restoring mandatory housebuilding targets for local authorities as part of the drive to build 1.5 million homes over five years.
Vistry said on Tuesday: "We look forward to working closely with the new government and are supportive of their plans to introduce mandatory housing targets, reform the national planning policy framework, add new planning officers and prioritise brownfield and 'grey belt' land.
"Our unrivalled expertise and track record in Partnerships housing delivery and our current growth momentum, uniquely positions Vistry to play a key role in helping the government address the country's affordable housing crisis. We are encouraged that they are seeking to move quickly and are in a strong position to support this."
Vistry said it is looking forward to working with the UK government to "deliver the biggest boost to affordable housing in a generation".
Vistry on Tuesday said adjusted operating profit is expected to climb 10% to GBP227 million in the first half of 2024 from GBP206.7 million a year before, with adjusted pretax profit up 6.9% to GBP186 million from GBP174.0 million.
Third Bridge analyst Yanmei Tang, however, said profit is a concern for Vistry, though the priorities of the new UK government could be a boost for the firm.
"Third Bridge experts are closely scrutinizing the profitability of Vistry's partnership model. Vistry, like other homebuilders, is encountering challenges in obtaining planning consents," Tang added.
"A Labour government could provide a tailwind for Vistry compared to other traditional homebuilders. With promises of 300,000 houses annually, they are expected to release more land and offer taxation support, along with backing on planning, particularly for affordable housing. Standardisation can boost Vistry's margin. As volume housebuilders, implementing a standardized template and procurement process enables them to build homes faster and more cost-effectively."
Tang added: "The market is perfect for Vistry given the sluggish private sales market. The real question lies in what unfolds as interest rates decrease and private market activity picks up."
Vistry said total completions were up 8.5% annually to 7,750 units from 7,143 units in the six months to June 30.
Looking ahead, Vistry said it is well positioned to deliver more than 18,000 completions in 2024, up 12% from 16,118 in 2023, as well as full year profit ahead of the year earlier.
Vistry added it expects to achieve a 40% return on capital employed and GBP800 million in adjusted operating profit in the medium term. This compares to 21% ROCE in 2023 with an adjusted operating profit of GBP487.9 million.
Vistry said it is committed to returning GBP1 billion of capital to shareholders within three years via ordinary and special distributions. Its GBP100 million share buyback programme it had started in April is ongoing, with so far GBP51 million in shares bought back as at the end of June.
It will release its half-year results on September 5.
Vistry shares were down 1.6% at 1,272.00 pence each in London on Tuesday morning.
By Eric Cunha, Alliance News news editor
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