Shares in housebuilder Vistry (VTY) plunged 20% after the firm lowered its margin guidance for FY26 due to price incentives. The firm also announced it was putting buybacks on hold and CEO Greg Fitzgerlald was stepping down.
Focus on cash
The group said 2026 had started well with an average of 1.42 sales per site per week against 0.59 a year ago. Open market sales are 40% ahead of last year, ‘primarily reflecting the success of the targeted pricing initiatives’.
The focus for 2026 is to increase cash generation and reduce housing inventory by driving Open Market sales with incentives. However, average daily debt will be higher in H1 before the benefit of higher sales come through.
Year-end cash is expected to be around £100 million, but to reduce debt no more buybacks are planned. There is still £29 million of the existing £130 million programme to go, but future distributions are under review.
Tough 2025, CEO to depart
The FY26 guidance came alongside lacklustre FY25 results with revenue and operating profit down on the previous year. Revenue fell 4% to £4.15 billion while operating profit dipped 1% to £354 million.
Completions were down 9% to 15,658 units due to ‘challenges’ in the Open Market and delays in partner funded deals. The group added fewer new plots during the year as it focused on cutting debt.
The group also announced chair and CEO Greg Fitzgerald would give up the post of chair at May’s AGM. Fitzgerald will remain as CEO for up to 12 months or until a successor is found.
With investors’ nerves already on edge, now isn’t the time for companies to disappoint by lowering the outlook. To add insult to injury, Vistry is ending share buybacks once the existing scheme is completed.
As sector followers will note, Taylor WImpey (TW.) lowered its margin forecast when it posted a trading update in January.
We probably sound like a broken record but with each update we have said it’s too early to buy housebuilders. Now, with UK interest rate cuts on hold until H2, there’s even less reason to expect a rally short-term.
Read the press release here: https://www.vistry.co.uk/investors/results-reports-presentations
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