Vistry holds guidance on upbeat outlook despite 50% profit fall

(Sharecast News) - House builder Vistry held full year guidance and said it expected to deliver a year-on-year increase in profits this fiscal year despite an uncertain economic environment that saw interim earnings halved. Pre-tax profit came in 55% lower at £40.9m on a reported basis for the six months to June 30, with completions down 12% to 6,889 units. Vistry is pinning its hopes on the government's £39bn social and affordable home programme.

However, it said trading in the second quarter had softened "reflecting increased macro concerns and ongoing affordability challenges, particularly for first time buyers, with expected interest rate cuts being pushed further out". The forward order book fell to £4.3bn against £5.1bn this time last year.

Vistry added that it was looking to bolster sales with new marketing initiatives and was offering private buyers discounts of up to 5% on the sale price.

"We are looking to drive an improvement in our open market sales rate in the second half through our sales and marketing initiatives albeit we remain mindful that demand will continue to be influenced by macroeconomic uncertainties," it said.

Persistent inflation has forced the Bank of England to delay rate cuts putting struggling households under even more pressure amid a weak macroeconomic environment. The company now specialises in building social and affordable homes for its partners.

Vistry this week formed a long-term joint venture with the UK's housing agency Homes England, creating a new entity called Hestia, backed by a combined £150m of capital investment.

"The new social affordable homes programme provides an unprecedented level of funding for affordable housing over the next 10 years. Through our partnership model and commitment to mixed tenure development, Vistry is uniquely placed to maximise this opportunity and play a key role in delivering high-quality affordable homes across the country," said chief executive Greg Fitzgerald.

Reporting by Frank Prenesti for Sharecast.com