Profits at the UK housebuilder Vistry Group have slumped by more than a third in what it described as a “disappointing year” but it is pinning hopes of a turnaround on the government’s promise this week to inject £2bn into affordable homes.
After three profit warnings last year, Vistry suspended dividend payouts to shareholders on Wednesday. Its shares were the biggest faller on the FTSE 250 index, dropping by 8% before easing to 6% down.
Greg Fitzgerald, Vistry’s chief executive, said 2024 had been challenging but welcomed the government’s affordable housing pledge, adding that the builder would “be seeking to progress as quickly as possible with our partners to deliver quality new homes across the country”.
In her spring statement on Wednesday, Rachel Reeves confirmed that the Treasury would fund 18,000 affordable and social homes as part of its housebuilding drive. She said: “Changes to the national planning policy framework alone will help build over 1.3m homes in the UK over the next five years, taking us within touching distance of delivering on our manifesto promise to build 1.5m homes in England this parliament.”
Vistry, formed from the merger of Bovis Homes and the housebuilding division of Galliford Try in 2020, has pivoted towards building affordable homes in partnership with housing associations in recent years.
The Investec analyst Aynsley Lammin said: “Partnership homes demand has clearly been softer of late, not helped by the lack of funding, but the news of a £2bn government funding injection should help from later this year.”
Vistry also revealed it had ordered its staff back to the office five days a week at the start of 2025, moving away from hybrid working, with one to two days a week at home depending on the role.
“There are real benefits to working in the office five days a week. This includes: collaboration, sharing ideas, opening up communication and developing a sense of unity,” it said.
The company’s adjusted profit before tax fell by 35% to £263.5m last year, with the total number of completed properties up by 7% to 17,225. Completions done in partnership with housing associations increased by 18% to 12,633, while homes sold on the open market were down by 15% to 4,592.
This year has not got off to a strong start, with the builder’s sales rate dropping to 0.59 per site per week, from 0.81 in 2024.
It is trying to draw a line under a damaging accounting scandal after admitting in November that cost overruns on building projects in its south division were worse than previously thought.
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This means Vistry is taking a £165m hit, reducing 2024 profits by £91.5m with the remainder affecting future years. There were also some delays to concluding agreements with its partners at the end of the year.
The housebuilder said it had carried out a “root-and-branch review” of its procedures and removed senior executives in the south division. It cut more jobs in the first quarter after a reduction of 200 during an overhaul of its businesses in late 2023, and paid out less in bonuses last year as profit targets were not met.
Vistry spent more on building safety repairs – £114.7m compared with £19.3m in 2023. The government ordered housebuilders to replace unsafe cladding and carry out other repairs at their high-rise blocks after the Grenfell Tower fire in 2017. Vistry set aside an extra £117.1m for 41 buildings after regulatory changes.
The Hargreaves Lansdown analyst Aarin Chiekrie said 2024 had been “a year for Vistry investors to forget”, with its share price crumbling by more than half over the past 12 months.