Shares in housebuilder Vistry (VTY) fell 12% to a 15-year low after the firm warned H1 profits will be ‘significantly lower’. The company guided FY profit expectations to the middle of the range of estimates, but the damage was done.
H1 hit to earnings
Ahead of its AGM at midday, the firm said it was updating guidance after the increase in macro-economic uncertainty. It also pointed to ‘a range of potential outcomes’ for the year, suggesting there may be further changes to foreacsts.
For the first half of 2026, the firm has accelerated sales of its completed or near-completed homes. That has resulted in a 32% increase in the year-to-date sales rate compared with the same period in 2025.
However, to maintain that sales rate the use of incentives and discounts has increased, particularly on low margin sites. That has resulted in ‘an earlier recognition of profit impacts’ meaning H1 earnings are taking the full brunt of dicounting.
Meanwhile, the Middle East conflict has started to create ‘upward pressure’ on material and labour costs. While the firm is attempting to mitigate these, it admits input costs are likely to keep rising in H2.
The last thing any company needs to appear is desperate, but Vistry has to improve its cash generation. If that means selling units at a discount, and taking a hit to H1 earnings, so be it.
That doesn’t mean investors have to like it though, and today’s reaction speaks volumes. The shares are down 55% this year, meaning over £1 billion of shareholder value has been wiped out.
We’ve repeatedly said there are better alternatives to housebuilders, even in the construction sector. Infrastructure stocks, for instance, have far brighter prospects due to government spending and regulation.
Interestingly, Vistry’s new CEO Adam Daniels, whose background is in partnership housing, has begun an operational review of the business. The firm said the findings will be shared no later than the interim results in Spetmber so watch this space.
Read the press release here:
https://www.vistry.co.uk/investors/results-reports-presentations
