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Vistry is to cut 200 jobs and has downgraded its annual profit forecast as the UK housebuilder shifts its strategy to focus on affordable housing amid a slowdown in the private sector.
The company, which employed about 5,200 people at the end of last year, said on Monday that it would close five of its 32 regional offices as part of a pivot towards affordable housing that was announced last month. The closures will result in 200 redundancies.
The move follows an earlier round of redundancies targeting 4 per cent of its workforce linked to its £1.25bn acquisition of Countryside Partnerships last year.
Vistry is merging its housebuilding division with its partnerships business, which works with the public sector and housing associations to build affordable homes. The group said last month that the move would allow it to return £1bn to shareholders over the next three years.
However it added on Monday that implementing the new strategy would cost about £40mn, prompting it to cut its adjusted pre-tax profit expectations to £410mn from the previous target of “in excess of £450mn”. It also warned investors that it expected £450mn in net debt for the full year, higher than previously expected.
The group however said it was hoping to generate about £25mn in annual savings as a result of its shift to affordable housing.
Vistry’s shares were down 5.5 per cent in early London trading at £6.85.
Aynsley Lammin, an analyst at Investec, said that the £40mn hit to Vistry’s margins was “not exceptional” but noted the housebuilder’s more cautious tone around its annual profit targets.
The housebuilder said that sales of private homes have not picked up since the summer, when high borrowing costs and inflation put pressure on would-be home buyers.
“We saw a slowdown in open market private sales during the summer months due to the higher interest rate environment and inflationary cost pressures on household income,” it said. “This trend has continued and we have not seen the seasonal increase in private sales since September that we had expected.”
Vistry posted an average weekly sales rate per site of 0.60 since the start of July, down from 0.64 over the same period last year.
House sales are on track for their slowest year since 2012, according to property portal Zoopla, as high mortgage rates and the end of a government support scheme for first-time buyers have damped demand.
Vistry said it expected to complete the £55mn share buyback programme it announced last month by March next year.
