Housebuilder reports strong first half and says full year profit to be higher than expected
Shares in Vistry leapt more than 5 per cent today after the firm raised year-end profit expectations for the second time in less than four months.
Announcing a pre-tax profit of £156m in half-year results to June 30, the housebuilder said a strong operational performance and “positive customer demand” in July and August meant it was now forecasting “adjusted” pre-tax profit of around £345m for the year, 5% above its previous guidance.
The upgrade in expectations saw the firm’s share price rise as much as 6% in early trading. The business had already increased adjusted pre-tax expectations from £310m to £325m in May.
Chief executive Greg Fitzgerald said Vistry, formed at the start of last year from the merger of Bovis Homes with Galliford Try’s housebuilding and partnerships housing businesses, was “in great shape” following “an effective operational integration”.
The performance in the first six months of the year represent a significant improvement on 2020’s covid-hit half-year results, when the business fell to a £12.2m pre-tax loss. The business said today that it built 5,351 homes in the period, up 76%, on revenue of £1.1bn, up 82%.
It also said it had improved its net cash position to £31m at the end of the period, up from the net debt of £357m recorded in 2020. The higher margin “mixed tenure” revenues from its partnerships business more than doubled, to £163.9m.
The business admitted that its supply chains came under pressure in the first half of the year, and said “there has been an increase in material prices towards the end of the first half”. However, any increases to the cost of production were more than covered by increases in sale prices given house price inflation.
The firm said it’s adjusted revenue stood at around 4% above the proforma pre-pandemic numbers seen in the pre-merger Bovis and Galliford businesses, with the housebuilding business reporting turnover of £869m in the half year from 3,126 completions, and the partnerships business reporting revenue of £391m from the construction of 2,225 homes.
Fitzgerald (pictured) said: “Housebuilding delivered a significant improvement in margin in H1 and we expect this to continue, whilst Vistry Partnerships is firmly on track to deliver more than £1bn of revenue in FY22 and a margin in excess of 10%, driven by the accelerated growth of its higher margin mixed tenure revenues.
“The group holds a unique market position with strength and capability across all housing tenures, and we are firmly focused on maximising the opportunities this brings.”
The announcement comes after Vistry last week announced a new sustainability strategy, with a plan to develop a set of science-based energy targets by 2022 in order to make the business net-zero compliant.
Last week it was named as one of just four profit-making businesses to form a strategic partnership with Homes England to deliver new affordable homes under the government’s affordable homes programme. Vistry will receive grant funding of £83m to build almost 1,500 homes.
The business is targeting delivery of 8,000 homes per year from its traditional housebuilding business in the “medium term”, at the same time as raising annual revenue from the partnerships business, currently around £1bn, to £1.6bn within five years.
Fitzgerald also announced the firm intends to issue a 20p per shae dividend for the first half of the year, and was committing to returning further excess cash to shareholders in the future. The firm’s share price increase came as other housebuilders share fell amid a declining London stock market.