By Aby Jose Koilparambil
(Reuters) -British homebuilder Vistry on Friday forecast further cost pressures in 2025 after issuing its second annual profit warning in a month, citing additional costs in its South Division, sending its shares sharply lower.
Shares of Britain’s largest homebuilder by yearly output fell about 15% to a more than 12-month low of 736 pence in early trade.
Vistry’s cost concerns come at a time when British homebuilders have seen signs of recovery in recent months, spurred by two Bank of England interest rate cuts in the last three meetings and supportive policy measures from the government.
The Kent, England-based company, which makes most of its sales through partnerships with local authorities, housing associations and government providers, said it expects an adjusted profit before tax for the year ending Dec. 31 of about 300 million pounds ($389 million), lower than the 350 million pounds it forecast last month.
Investec analyst Aynsley Lammin said in a note that it could take longer for Vistry to achieve its medium-term profit and capital return targets, and to regain confidence of the market.
Stifel analysts said in a note the market is likely to remain wary of further cost issues. They added that they do not see a read-across to the sector on the volume guidance or cost overruns.
Vistry, which has about 300 developments across six divisions, also slashed its annual construction targets by 500 units to 17,500 homes.
Vistry said a review found that the costs related to nine of the 46 developments in the South Division were greater than previously disclosed. The company expects the impact of the additional costs on its 2024 profit to rise to 105 million pounds from 80 million pounds. The South Division covers parts of southern England.
The company also said the direct impact to the group from the increase in Employer National Insurance contributions will be about 5 million pounds in fiscal year 2025.
British finance minister Rachel Reeves, in her first budget since the Labour government took office, raised employers’ social security contributions by 1.2 percentage points to 15% from April to raise revenue.
Earlier this week, Vistry’s FTSE 100 peer Persimmon flagged concerns about higher costs emerging in price negotiations for 2025, partly due to increased employee insurance benefits.
($1 = 0.7711 pounds)
(Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Abinaya Vijayaraghavan and Jane Merriman)
