In early trading, over £1.5bn was wiped from Vistry’s market value after the company misjudged the construction costs for nine of its developments.
Vistry shares have become the worst performer on the FTSE 100, wiping out all gains made in 2024.
The stock plummeted as much as 36%, briefly hitting its lowest level since December. Aarin Chiekrie, equity analyst at Hargreaves Lansdown, commented:
“Vistry revealed its first major misstep this morning since shifting its strategy away from traditional housebuilding.”
The company’s new partnership model, which focuses on working with local authorities to provide affordable housing, has previously helped it resist the broader housing market slowdown.
The group revealed it had “recently become aware” that the costs for nine out of 46 developments in its southern division, including several large-scale projects, were understated by approximately 10%.
While that might not seem significant, it has reduced underlying pre-tax profit expectations by £80m this year and by £30m and £5m over the next two years.
This represents a nearly 20% hit to market forecasts for the current year, with Vistry now projecting underlying pre-tax profits of around £350m for the full year.
As a result, this year’s underlying pre-tax profits are expected to be around £80m lower than anticipated, bringing them to approximately £350m—representing a 16% decline from the £419.1m reported in 2023.
Vistry, formerly known as Bovis Homes, has launched an independent review into the issue and announced a restructuring of its southern division’s management in response to the discovery.
Despite the profit warning, the company remains on track to meet its target of completing over 18,000 new homes this year.
