Vistry Shares Plunge After Profit Warning

Vistry Group (LON: VTY), a leading UK housebuilder, issued a profit warning that sent its shares plummeting by 35% in early Tuesday trading.

Vistry shares are now trading around the 843p mark, their lowest level since December 2023.

The plunge comes after the company revealed that cost projections for nine of its developments in the South Division had been significantly understated.

“The total full-life cost projections to complete 9 out of its 46 developments, including some large-scale schemes, have been understated by c. 10% of the total build costs,” the company said.

The revised estimates have resulted in a reduction of approximately £80 million in expected adjusted profit before tax for the current fiscal year (FY24).

The impact will also extend into the following two years, with estimated reductions of £30 million in FY25 and £5 million in FY26.

“The reduction in expectations in these three years relates to overall cost estimates across the full life of the developments,” added the company.  

As a result, Vistry said it now expects adjusted profit before tax in FY24 to be around £350 million.

Vistry attributed the issue to problems within the South Division and has announced changes to the management team. An independent review is also underway to investigate the root causes of the cost underestimations.

Despite the profit warning, Vistry remains confident in its overall strategy and continues to target a net cash position and a strong increase in high-quality mixed-tenure housing. The company also reaffirmed its commitment to a £130 million share buyback program.