Commonwealth_ UK housebuilder Vistry Group has reported a significant drop in profits, marking a challenging year for the company. Profits fell by over a third, leading to what the firm described as a “disappointing year.” However, hopes for a turnaround have been pinned on the government’s recent pledge to inject £2 billion into affordable housing. The company, which had issued three profit warnings in the past year, responded by suspending dividend payouts to shareholders. The announcement caused a sharp decline in its stock, with shares falling more than 7% on the FTSE 250 index.
Chief Executive Greg Fitzgerald acknowledged the difficulties of 2024 but expressed optimism about the future. He welcomed the government’s commitment to affordable housing and emphasized Vistry’s intent to accelerate the development of quality homes in collaboration with its partners.
The government’s affordable housing initiative, confirmed in the recent spring statement by Chancellor Rachel Reeves, promises to fund 18,000 affordable and social homes. Additionally, changes to the national planning policy framework are expected to facilitate the construction of over 1.3 million homes across the UK within the next five years, edging closer to the government’s target of 1.5 million homes in England during this parliamentary term.
Shifting focus toward affordable housing
Vistry was formed in 2020 following the merger of Bovis Homes and Galliford Try’s housebuilding division. Over the past few years, the company has strategically shifted toward building affordable homes in partnership with housing associations. Analysts believe this transition will benefit from the government’s latest funding initiative. Investec analyst Aynsley Lammin noted that demand for partnership homes had been relatively weak due to funding shortages. However, the £2 billion injection is expected to improve the situation later in the year, potentially revitalizing Vistry’s market position.
Changes in Workplace Policy
As part of its restructuring efforts, Vistry has decided to end hybrid working arrangements, requiring employees to return to the office five days a week starting in early 2025. The company believes in-person work fosters better collaboration, communication, and a stronger sense of unity among employees.
Financial Performance and Market Trends
Vistry reported a 35% drop in adjusted profit before tax, bringing it down to £263.5 million for the year. However, the total number of completed properties increased by 7%, reaching 17,225 units. The company’s focus on affordable housing saw completions in partnership with housing associations rise by 18% to 12,633 homes, whereas sales on the open market declined by 15% to 4,592. Despite the increase in overall completions, the start of 2025 has been sluggish. The company’s sales rate has fallen to 0.59 sales per site per week, down from 0.81 in the previous year.
Accounting Issues and Cost Overruns
Vistry has been grappling with an accounting scandal that surfaced in November. The company admitted that cost overruns in its southern division were worse than initially reported, leading to a £165 million financial impact. Of this, £91.5 million affected 2024 profits, with the remainder set to impact future financial years. In response, the company conducted a comprehensive review of its financial procedures, leading to the removal of senior executives in the affected division. The company also reduced jobs in the first quarter of 2025, following an earlier workforce reduction of 200 employees during a business overhaul in late 2023. Additionally, bonuses were significantly reduced due to unmet profit targets.
Building Safety Costs and Regulatory Compliance
Vistry has also increased its spending on building safety repairs, allocating £114.7 million compared to £19.3 million in the previous year. The rise in safety-related costs follows government mandates requiring housebuilders to replace unsafe cladding and conduct repairs on high-rise buildings in the wake of the Grenfell Tower fire in 2017. As part of regulatory compliance, Vistry has set aside an additional £117.1 million to address safety concerns across 41 buildings affected by new regulations.
