26 March 2025
If you are covering Vistry’s latest financial results, please find below a comment from Oli Creasey, head of property research at Quilter Cheviot:
“Vistry endured a difficult 2024, ending the year with three consecutive profit warnings in the fourth quarter that exposed accounting problems in the company’s southern division. Today’s full year results attempt to draw a line under these issues – a forensic review of the entire business has shown that the problems were limited to one division and no further reductions in profit are expected. Indeed, following a restatement of 2023 earnings, the reduction in 2024 is less than previously thought, although unchanged in absolute terms.
“2024 sales volumes were up 7%, and with the open market sales price down slightly year-on-year, revenues grew at the same rate. Investors will be somewhat encouraged by the improvement, but be more focused on the sharp falls in profitability (albeit these were expected following the profit warnings).
“Net debt has grown to £180m – a relatively small figure and only just over 1x the company’s operating profit. While small, it is unusual for a housebuilder to operate with any net debt since 2009, and demonstrates the impact that the profit warnings have had on the business. Management has stated that it is focused on net debt reduction, which we would agree is a sensible move, but the admission that it will take until the end of 2026 to return to a net cash position demonstrates the scale of the task. Plans to accelerate cash release include possible land sales (unusual for a housebuilder who are normally buying land), and the company are considering both bulk sales and discounting. While the share buyback plan continues, the board have not proposed a dividend for 2024.
“First quarter 2025 performance is typified by a 0.59x sales rate, which feels light compared to the numbers reported by peers. Vistry has noted that this figure is low as a result of low volumes in the partner-funded business, although believe that 2025 volumes will be similar to 2024 over the course of the full year. While there was no commentary, we wonder if the slowdown in partner-funded sales is a result of last year’s profit warnings – companies may be reluctant to go into business with a partner whose finances are not in good shape.”
