Housebuilder Vistry Group has announced a sharp uptick in sales and profits as its partnerships-led business model delivered the goods.
But the market was largely unimpressed by the news. At £12.68 per share, Vistry’s share price was last 1.9% lower in Tuesday business.
Adjusted operating profit at the FTSE 250 builder rose 10% between January and June, to £227 million. Adjusted pre-tax profit, meanwhile, was up 7% year on year at £186m.
Completions rose 8% to 7,750 units, the firm said, while the sales rate increased to 1.21 per site per week from 0.86 in the same 2023 period.
Vistry said that “the year on year increase reflects both stronger demand and the transition of our business to our 100% partnerships model.”
Forward sales increased 21% during the period, to £5.1 billion.
Partnerships Paying Off
The business announced last September plans to switch to a partnerships-only approach. Under this model it works with housing associations, local authorities, and private residential landlords to better meet soaring demand for affordable housing.
Vistry noted that the open housing market “remains relatively constrained reflecting ongoing macro and political uncertainty and the higher interest rate environment.”
It expects partner-funded sales to account for 75% of total completions in 2024, before retreating to 65% eventually as conditions in the open market recover.
Total completions are tipped to come out at 18,000 this year, up from 16,118 in 2023.
“Strong Performance”
Chief executive Greg Fitzgerald said that “the group has delivered a strong performance in the first half which underpins the board’s confidence in its expectations for the full year.”
He said that “our partnerships model is significantly outperforming the broader housebuilding market and we are confident we will deliver over 18,000 completions for the full year and make progress towards our medium term targets.”
Fitzgerald added that “we look forward to working with the new government to address the country’s housing crisis and are extremely well placed to support its ambition of delivering the biggest boost to affordable housing in a generation.”
Britain’s new government on Monday affirmed its intention to build 300,000 homes a year through to 2029. It plans to achieve this by speeding up construction work on stagnating sites and loosening the UK’s strict planning regulations.
“Good Week”
Analyst Adam Vettese of eToro said that “it has been a good week for builders following Labour’s election win and bold housing pledges. Vistry Group will look to reap the benefits as demand for affordable homes should see the firm’s profit rise around 7%.”
He described this as “quite the turnaround from long-term material cost increases due to inflation, as well as a slow rate cutting cycle dampening the market for new home sales.”
Vettese added that “cost pressures are starting to ease and the first rate cut is likely just around the corner, so if the new government is true to its word it could be a great time to be in the housebuilding sector.”
Read the full article here
