ii view: Vistry flags six-month loss but upbeat about full year

First-half trading update to 30 June

• Expects a H1 pre-tax loss of £30 million
• Build completions of 6,100, down from 6,889 in H1 2025
• Sales rate of 1.03 homes per site per week, up from 1.01 in H1 2025
• Net debt of £470 million, up from net debt of £144 million as of 31 December 2025

Guidance:

• Continues to expect annual adjusted pre-tax profit of around £200 million versus £269 million in 2025
• Continues to expect year-end net cash in excess of £100 million

Chief Executive Adam Daniels said:    

"In the three months I have been in the role I am encouraged by the progress we have made, and continue to make, on refocusing the business. We are taking the necessary decisions to position Vistry for future success and to ensure that we can take advantage of the significant opportunities that our differentiated business model offers.

“The management team believes that the long-term success of the business must be at the core of our decision making, and as such we are treating 2026 as a transition year to reposition the business to operate with significantly and sustainably lower financial leverage and healthy profitability."

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ii round-up:

Affordable homes builder Vistry Group (LSE:VTY) today warned of a likely first-half loss alongside the departure of its chief financial officer, Tim Lawlor, in October.

A first-half loss of £30 million compares with City forecasts for a profit of around £36 million. Actions by the relatively new head Adam Daniels, such as increased selling incentives on slower-moving homes, had led to additional costs of £50 million, which obviously affects profit.

Ongoing management actions such as cost savings of £25 million and land sales are expected to underpin a full-year adjusted pre-tax profit of around £200 million - in line with current City forecasts but lower than last year’s £269 million.

Shares in the FTSE 250 housebuilder fell 10% in UK trading having come into this latest news down by around 60% so far in 2026. That’s similar to mid-sized housebuilder Crest Nicholson. The FTSE 250 index is up 2% year-to-date.

Vistry partners with organisations such as local authorities and housing associations to develop mixed tenure homes like shared ownership under a focus to build more affordable homes.

Build completions for the first half to late June of 6,100 was down from 6,889 in H1 2025. A sales rate of 1.03 homes per site per week remained similar to that seen during the first half of last year.

Group net debt of £470 million was up from £144 million as of late December, although management remains confident that ongoing actions, such as land sales and a previous ending of share buybacks, will generate a year-end net cash position of more than £100 million.

Head Adam Daniels is expected to outline the findings of a financial and strategy review no later than first half results on 24 September.  

ii view:

Started in 1965 and formerly Bovis Homes, Vistry today partners more than 90 organisations such as local authorities and housing associations in developing mixed tenure affordable homes such as rent-to-buy. The FTSE 250 housebuilder operates via six divisions across England, supported by three factories producing items such as timber frame panels and roof trusses.

For investors, a series of operational challenges and subsequent profit downgrades continue to weigh on investor confidence. Conflict in the Middle East and resultant elevated energy prices now cast a shadow over the inflation outlook and interest rate levels. Higher energy prices may well feed through further to increased material costs, potentially hindering profits, while a focus on reducing debt in favour of shareholder returns contrasts with forecast dividend yields of 5%-plus at rivals Persimmon (LSE:PSN) and Taylor Wimpey (LSE:TW.).    

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More favourably, a management review of group strategy is ongoing, with actions expected to sharpen the group’s focus on affordable housing. Government support for affordable housing could potentially increase under a new UK Prime Minister. A focus on cash is expected to see the group turn net cash positive come late December, while previous M&A activity across the sector, and given Barratt’s acquisition of Redrow, should not be forgotten.

For now, a focus on affordable housing and share price-to-net asset value comfortably below the three-year average will keep Vistry on investors' radars. That said, a tough economic outlook and so much left for Vistry to achieve in the second half will likely keep more cautious investors watching from the sidelines.

Positives:

• Differentiated business model
• Previous sector M&A activity

Negatives:

• Concerns for inflation and interest rates
• Increased employer tax costs

The average rating of stock market analysts:

Hold