British housebuilder Vistry has warned that its profit will be £80m lower than expected this year due to issues with some of its housing developments.
The FTSE-250 firm told markets this morning that it had “recently become aware” of higher-than-expected costs in nine of its 300 developments.
Vistry said that the schemes’ cost, including some large builds, has been understated by around 10 per cent.
It subsequently lowered its profit guidance for 2024 by £80m, taking expected adjusted profit before tax to £350m, a cut of around 20 per cent. It lowered guidance for 2025 by £30m and for 2026 by £5m.
“We believe the issues are confined to [one division] and changes to the management team in the division are underway. We are commencing an independent review to fully ascertain the causes,” the housebuilder said.
“We remain committed to delivering a strong increase in high quality mixed tenure housing, our medium-term target of £800m adjusted operating profit, and £1bn of capital distributions to shareholders,” it added.
In early September, the company reported a rise in revenue and said it was on track to build close to 18,000 homes in 2024. Vistry said its housebuilding guidance was unchanged in its latest update.
The company has previously outperformed the wider housing market and had expected a year-on-year rise in profit, partly due to its focus on delivering affordable housing as part of its growth strategy.
Last October, the firm said it would focus solely on building affordable homes via its Partnerships business. This partners with local authorities and other social housing providers after a volatile housing market eroded demand for buildings in the private sector.
In its last trading update, chief executive Greg Fitzgerald expressed support for the government’s housing policy, which should see 1.5m homes built in the next five years, along with an overhaul of the planning regime.