By Aby Jose Koilparambil and Chandini Monnappa
(Reuters) -UK housebuilder Vistry kept its 2024 earnings forecast on Wednesday after issuing three profit warnings since October, and said it had made cost cuts that would reduce its operating divisions from six to three after cost issues last year.
The company cautioned that market conditions remained uncertain as the housing sector navigates affordability and broader economic issues.
While the pace of recovery of the British housing sector has been in doubt due to slower-than-expected interest rate cuts, tax rises and higher labour costs, a surprise fall in December inflation and banks resisting mortgage rate hikes are expected to benefit the sector.
Vistry shares were up as much as 10% to 566.50 pence by 1055 GMT on Wednesday, as housing stocks benefited from UK’s inflation data.
Vistry’s stock slumped about 38% in 2024.
“It is a relief rally (for Vistry)… the whole sector is up on better inflation data, and the restructuring brings decision-making under better control,” Aynsley Lammin of Investec said.
In October and November, Vistry warned of lower annual profits from cost overruns in its South Division, which it said would have a 165 million pound ($201.7 million) impact. It issued another profit warning in December.
The company on Wednesday said it had streamlined its operational structure, reducing its divisions from six to three.
The Kent, England-based company said it expects adjusted pre-tax profit of about 250 million pounds and annual revenue of around 4.4 billion pounds, surpassing market expectations of 4.05 billion pounds.
Vistry’s net debt position at year-end stood at 180 million pounds, 20 million pounds lower than its forecast, while completions rose 7% to 17,200 homes.
On Tuesday, peer Persimmon forecast 2024 earnings at upper end of market view, buoyed by improved sales and pricing strength.
($1 = 0.8181 pounds)
(Reporting by Aby Jose Koilparambil and Chandini Monnappa in Bengaluru; Editing by Sherry Jacob-Phillips and Jan Harvey)
