Britain's Vistry tempers profit outlook on margin drop; shares fall
(Reuters) -Britain's Vistry lowered its annual profit forecast on Monday to reflect the impact of a reduction in site margins and said it would cut 200 jobs, as the homebuilder sharpens its focus on affordable housing.
Shares in the FTSE 250 company dropped 6.2% to a more than three-month low of 680 pence, making it the worst performer on the mid-cap index.
Vistry, one of the biggest British house builders in terms of the number of homes built, has shifted its focus from its traditional Housebuilding business to working with local government authorities and housing associations to build affordable homes, through its Partnerships unit.
The job cuts stem from the integration of the Partnerships unit with its Housebuilding operations. It expects to save 25 million pounds ($30 million) a year as a result.
The company bolstered its Partnerships business with its 1.25 billion-pound acquisition of rival Countryside last September.
This prompted a re-evaluation of margins from its Housebuilding sites as the company gave pre-sale offers and price discounts. The estimated impact is 40 million pounds for the year, the company said.
Including this impact, Vistry now expects adjusted pre-tax profit for the year ending Dec. 31 to be 410 million pounds, compared with the over 450 million pounds it was targeting earlier.
Britain's housing market has been battling a slowdown for much of this year as high mortgage rates dampen demand and consumers rein in spending amid a prolonged cost-of-living squeeze.
Rival homebuilder Barratt said last week it expects the housing market to remain difficult over the coming months and refrained from providing a full-year profit forecast, citing the "uncertain" outlook.
Meanwhile, Bellway forecast a slump of about one third in annual output as affordability concerns drive homebuyers away.
Vistry's average weekly sales rate since July 1 to date has been 0.60 units compared with 0.64 units a year earlier, it said.
The company said it had not seen the expected seasonal increase in sales since September.
"While tougher current markets and the site re-evaluation are not helpful in the short term, it does not change where the group is going and what it will be worth, in our view," Peel Hunt analysts said in a note.
($1 = 0.8230 pounds)
(Reporting by Eva Mathews in Bengaluru; Editing by Dhanya Ann Thoppil and Sharon Singleton)
