Vistry Group, a leading housebuilder, has reported a significant increase in sales and profits thanks to its partnerships-led business model. Despite this positive news, the market was not impressed, with Vistry’s share price experiencing a 1.9% decrease. The company’s adjusted operating profit rose by 10% to £227 million, and adjusted pre-tax profit increased by 7% to £186 million. Completions also saw an 8% rise to 7,750 units, with a sales rate of 1.21 per site per week.
Vistry’s decision to switch to a partnerships-only approach in September has proven beneficial, with forward sales increasing by 21% to £5.1 billion. The company collaborates with housing associations, local authorities, and private residential landlords to address the growing demand for affordable housing. Vistry expects partner-funded sales to make up 75% of total completions in 2024, decreasing to 65% as conditions in the open market improve. Total completions are anticipated to reach 18,000 this year, up from 16,118 in 2023.
Chief executive Greg Fitzgerald expressed confidence in the company’s performance for the full year, stating that the partnerships model is surpassing the broader housebuilding market. He believes Vistry will achieve over 18,000 completions for the year and make progress towards its medium-term targets. Fitzgerald also highlighted the company’s readiness to support the government’s goal of delivering a substantial increase in affordable housing, amidst Britain’s housing crisis.
The new UK government has pledged to build 300,000 homes annually until 2029, aiming to accelerate construction on stagnant sites and relax strict planning regulations to achieve this target. Analysts, such as Adam Vettese from eToro, see this as a positive development for housebuilders like Vistry Group, as demand for affordable homes is expected to rise. Vettese predicts a 7% increase in profits for Vistry, despite previous challenges such as inflation-driven material cost hikes and a sluggish rate-cutting cycle in the housing market.
Overall, Vistry Group’s strong performance in the first half of the year has reinforced the board’s confidence in meeting its full-year expectations. With the partnerships model proving successful and the prospect of government support in addressing the housing crisis, the company is well-positioned to continue its growth. As cost pressures ease and interest rate cuts potentially on the horizon, the housebuilding sector, including Vistry Group, could see significant benefits in the coming months.
