UK homebuilder Vistry plunges on profit warning due to higher costs

Shares fall as much as 36.3% to lowest since Dec 2023

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2024 profit forecast cut by 80 mln pounds

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Company says South division understated costs

By Aby Jose Koilparambil

Oct 8 (Reuters) - British housebuilder Vistry on Tuesday slashed its annual profit forecast after discovering that one of its divisions had understated the cost of some of its developments, sending the company's shares plunging about a third in value.

Britain's largest homebuilder by annual output said cost projections at nine developments in its South division had been understated by about 10% of total build costs and the adjustment would cut its adjusted profit before tax forecast for 2024 by 80 million pounds ($105 million) to about 350 million pounds.

It also warned of hits of about 30 million pounds and 5 million pounds for fiscal 2025 and 2026.

Vistry shares slumped as much as 36.3% to their lowest since December 2023, erasing almost all their gains this year. The stock was the biggest percentage loser on the benchmark FTSE 100 index.

The profit warning comes as British housebuilders are hoping for a turnaround in fortunes after a cut in UK interest rates in August lifted homebuyer confidence.

Investec analyst Aynsley Lammin said that the key issue was whether the overstatement was a one-off, as outlined by the company.

Shares in rivals Barratt, Persimmon, Taylor Wimpey and Berkeley were down by 1.8% to 2.2%. Lammin said that could be attributed to the weakness in the broader market and to some extent by the cost concerns highlighted by Vistry. Britain's main stock indexes fell in a broad sell-off led by losses in miners. Vistry, which has about 300 developments across six divisions and makes most sales from partnerships with local authorities, housing associations and government providers, last month forecast a 2024 profit above 2023's 419.1 million pounds.

Vistry Grp

Persimmon

Taylor Wimpey

Berkeley Group