Vistry looks set to report full-year underlying revenue of around £4.4bn, up 9%. This was helped by average weekly sales rates per outlet rising by 11% to 1.07.
The group completed around 17,200 new homes in 2024, up from 16,118 in the prior year. Average selling prices remained broadly stable at around £275,000.
The order book was 2% lower at £4.4bn. Year-end net debt is set to worsen from £89mn to around £180mn.
Full-year underlying pre-tax profit is expected to fall from £419mn to around £250mn, in line with recently lowered guidance.
In 2025, Vistry expects to “make progress” in both profit and cash generation. It’s also seeing that the open market “remains constrained” and expects demand to be at a similar level to 2024.
The shares rose 5.0% in early trading.
Our view
After delivering three consecutive profit downgrades in the three months prior, Vistry has finally broken its streak of bad news. A short trading update revealed that recently lowered profit guidance for the year just ended remains on track and points towards improved profits and cash generation in 2025, albeit off a much lower base.
At its heart, Vistry’s Partnership model specialises in providing affordable housing by teaming up with local authorities and housing associations. These partners foot most of the bill, which frees up Vistry’s cash to deploy on more projects across the business and drive faster-than-average growth.
It appears the group spread itself too thin and took its eye off the ball. A series of managerial missteps and accounting issues led to several profit downgrades toward the tail end of 2024, raising serious questions about the new structure and internal controls. Vistry will need to work hard to rebuild investor confidence.
The Partnerships model tends to be lower-margin than ordinary housebuilding projects too. And while selling these houses as part of bulk deals brings more cash in the door in one go, it further lowers the average selling price, meaning there’s little room for error.
The huge order book is a real asset, standing at a mammoth £4.4bn. Vistry’s huge scale allows it to negotiate harder on prices of building materials, which should see it navigate build cost inflation better than most of its peers.
Looking ahead, Vistry’s high volumes of affordable housing look well aligned with the new government’s ambition to address the country’s housing shortage. But the group’s called out that the open market remains tight, with mortgage affordability challenges persisting. Though, other housebuilders have recently reported signs of improvement in this area.
Net debt has worsened over the year due to lower-than-expected sales rates and construction delays. With net debt now sitting at around £180mn, we have some serious doubt about the group’s ability to meet its ambitious shareholder return targets.
The plan is to return £1bn of cash to shareholders over a three-year period through a combination of share buybacks and special dividends. But with recent downgrades to the profit outlook, we expect to see that reined back in some way. As always, no shareholder returns are guaranteed.
Vistry operates in a corner of the housing market where demand and sales should hold up relatively well, no matter the economic mood music. But management missteps have shaken confidence in the group’s profit targets, and more bad news can’t be ruled out. While the valuation looks attractive versus the long-run average, we’d like to see concrete signs that management issues have been ironed out before getting too excited.
Environmental, social and governance (ESG) risk
Most housebuilders are relatively low risk in terms of ESG, particularly for those in Europe. However, there are some environmental risks to consider, from direct emissions to the impact of their buildings on the local ecology. The quality and safety of their buildings is also a key risk.
According to Sustainalytics, Vistry’s management of ESG risk is strong.
It doesn’t disclose its greenhouse gas reduction initiatives, but it has set itself targets and deadlines. And its reporting of direct and indirect emissions is in line with best practice. However, there’s currently no disclosure of an established product and safety programme or disclosures around recycled material usage.
Vistry key facts
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