Housebuilding group Vistry has issued a profit warning after a costings error was revealed in the company’s southern division
In a trading update released this morning, Vistry have released a profit warning after a costings error was identified in the company’s southern division, with build costs on nine of 46 schemes under-estimated by around 10%.
The revised total full life cost projections are now expected to lower the forecast pre-tax profit for 2024 to £350m.
Vistry indicated they had identified those responsible
In the statement, Vistry said that they believed that “the issues are confined to the South Division and changes to the management team in the division are under way[…]We are commencing an independent review to fully ascertain the causes.”
Vistry still expects to deliver over 18,000 units in this financial year and will continue to target a net cash position after 2023’s net debt of £89m.
The firm also reiterated its commitment to the £130m share buyback programme announced last month.
The profit warning sees projected profits fall by £80m
In the statement, the partnerships housing specialist said: “The estimated one-off impact of adjusting for the revised development cost assumptions reduces the board’s expectations for adjusted profit before tax for FY24 by £80m, for FY25 by £30m, and FY26 by £5m.”
The firm said: “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 £800m adjusted operating profit, and £1 billion of capital distributions to shareholders.”
The news appears to have already had an impact on Vistry’s share prices, with early stock market trading seeing the value fall by around third.
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