Vistry has issued a profit warning after the realisation that build costs for schemes in its southern division had been underestimated by around 10%.
In a trading statement, the developer said that the underestimated build costs applied to nine schemes out of the 46 being built by the division.
The housebuilder has subsequently made changes to the management team of the division and launched an investigation into the cause.
Vistry’s statement said: “The estimated one-off impact of adjusting for the revised development cost assumptions reduces the board’s expectations for adjusted profit before tax for FY24 by £80million, for FY25 by £30million, and FY26 by £5million.”
The revision in costs is expected to lower Vistry’s forecasted pre-tax profit for the year to £350million.
A spokesperson for the housebuilder said: “We believe the issues are confined to the South Division and changes to the management team in the division are underway. We are commencing an independent review to fully ascertain the causes.”
Despite the underestimated costs, Vistry remains committed to the £130million share buyback programme which it announced last month. The developer also still expects to complete over 18,000 units in 2024 and the target of a net cash position for the year remains following the net debt of £89million it recorded in 2023.
The trading update continued: “Notwithstanding the one-off adjustment announced today, we remain committed to delivering a strong increase in high-quality mixed-tenure housing, our medium-term target of £800million adjusted operating profit, and £1billion of capital distributions to shareholders.”
