Vistry: Shares rise on positive outlook despite falling profit from ‘exceptional expenses’ on Grenfell fire safety changes

Vistry’s shares rose this morning despite a fall in profit as the company set out a positive outlook for the coming year.

The Kent-based housebuilder’s pretax profit fell to £247.5m from £319.5m the year before, a fall of 23 per cent.

It set aside cash to make buildings fire safe in the wake of the 2017 Grenfell fire, totalling £97 million during the year, helping to push down pre-tax profit by 22.5 per cent.

This decrease was primarily a result of “exceptional expenses”, including fire safety provisions and costs relating to the acquisition of Countryside, and the London disaster in 2017.

Earlier this month the housebuilder signed a contract with the Government which will force it to fix any unsafe buildings over a certain height that it put up over the last 30 years.

The contract – which has been signed by other housebuilders – came in the wake of the Grenfell Tower fire six years ago, which killed more than 70 people.

On an adjusted basis, the firm’s profit rose 21 per cent. Vistry also saw a 13 per cent increase in revenue.

However, the company’s shares rose 3.8 per cent in morning trading as investors were impressed by the firm’s outlook.

The group expects to deliver adjusted profit before tax for the 2023 financial year in excess of £440m. According to company compiled consensus, markets expect profit of around £403m for 2023.

In the first eleven weeks of 2023 Vistry has seen an “improving trend” on private sales while its Partnerships business is seeing strong demand from Housing Associations and Local Authorities. 

The company also said it is making “excellent progress” on its integration with Countryside. It now expects benefits from the merger to be around £60m, with about £25m expected in the 2023 financial year. 

The two companies agreed to merge in a £1.25bn deal in September last year. In the seven weeks it was part of Vistry, Countryside performed in-line with expectations making a minimal “contribution”.

“2022 was another landmark year for the Group as we delivered a step up in financial performance and made excellent progress across all areas despite the more challenging market conditions experienced in the fourth quarter.” CEO Greg Fitzgerald said

“The combination with Countryside presents a unique opportunity and has created one of the country’s leading homebuilders, comprising a leading partnerships business and a high quality major housebuilder,” he continued. 

Vistry built 7.9 per cent more houses this year than last. It aims to deliver “rapid growth” in higher margin mixed tenure completions, which were up 17.6 per cent on last year with a higher operating margin.

Analysts at Liberum said “overall this looks to be a solid update from Vistry Group. Whilst the broader housing market remains challenging, Vistry Groups more unique product offering gives it more visibility than most over the outcomes for FY23”.

Including contribution from Press Association – August Graham