Shares in one of Britain’s biggest housebuilder Vistry crashed more than a third today after a disastrous profit warning over an extraordinary litany of cost overruns at several of its sites.
The FTSE-100 developer, which owns the Countryside, Bovis and Linden brands, said it had “recently become aware” that the costs of completing nine major schemes in the south of England have been understated by around 10%.
This will have the impact of reducing expectations for profits by around £80 million in the current financial year, £30 million next year and £5 million in the year after that.
The company, headed by £3.172 million a year chief executive Greg Fitzgerald, said that “as a result” profits in the current financial year are expected to be around £350 million, about 20% below previous guidance.
It added: “We believe the issues are confined to the south division and changes to the management team in the division are underway. We are commencing an independent review to fully ascertain the causes.”
It continued: “Notwithstanding the one-off adjustment announced today, we remain committed to delivering a strong increase in high quality mixed tenure housing, our medium-term target of £800m adjusted operating profit, and £1 billion of capital distributions to shareholders.”
Anthony Codling, a managing director in equity research at RBC Capital Market, said: “Vistry believes the issue is confined to just 9 out of c.300 sites across the Group, but the impact on profits is a big one: a 20% cut in profit guidance for FY2024.
“This is a big cut, and we expect the price of the shares to fall significantly today. Investors will be looking to understand how the issue arose, how it is being dealt with and why and how Vistry is confident that the issue is confined to one division.”
In early trading the shares were down 34%, or 430.5p, at 842.5p
