Vistry has warned that its half-year profit will fall significantly year-on-year after discounting market homes to increase sales.
In a trading update from the start of year to date, the housebuilder said its sales rate had risen by 32% compared to the same period the previous year, up to 1.2 sales per site per week.
However, in recent weeks, Vistry noted “some moderation” in its sales rate, which it says reflects uncertainty around the Iran war, which was also causing “upward pressure” on material costs that could continue into the latter half of the year.
The housebuilder said that the increased incentives and discounts were more significant on schemes nearing completion and lower-margin sites, which had resulted in the overall profit impact being higher in the in the first half of the year than previously anticipated.
Despite the earlier than anticipated impact of the discounts, Vistry said that it expects the level of discounting and its effects to reduce in the second half of the year.
The housebuilder said that its discounting formed part of its strategy to boost cash generation, reducing its number of unsold open market homes. Vistry said that it had also delayed or slowed the building rate of some of its sites to better match its open market sales rate. The trading update also announced its plans to pause its share buyback scheme and set higher criteria for land buying.
The Group also expects to see an uptick in affordable housing demand later in the year, following a subdued first half of the year, with the social housing sector currently between government funding programmes. Vistry is anticipating a step up in demand from its affordable housing partners as a result of the £39billion Social and Affordable Homes Programme towards the end of 2026 and start of 2027, which it says will “contribute to a greater second half weighting of partner revenues”.
As a result of the improving picture in the second half of the year, Vistry says it expects its full-year profit to be in with the previous year, and has given a guidance for adjusted pre-tax profit of £168million and £283million. It also expects a net cash position of over £100million at the end of the financial year.
