Vistry lifts FY profit expectations amid 'strong' demand

Housebuilder Vistry lifted its full-year profit expectations on Monday as it highlighted "strong" demand.

Vistry said half-year results are set to be "well ahead" of its previous guidance, with adjusted pre-tax profit for FY21 now forecast at around £325m, up from previous guidance of at least £310m. The group maintained its expectations for FY22.

In an update for the period from 1 January to date, the company said it has had a "very positive" start to the year, with "consistently strong" demand across all areas of the business and an average weekly private sales rate of 0.75, up 21% on 2019. During the period, it has transitioned to the new Help to Buy scheme designed for first time buyers only and is seeing good demand for the product.

Housebuilding is on track to deliver a "significant" step-up in completions in FY21 to around 6,500 units from 4,652, ahead of its previous expectations, and an improvement in gross margin to around 22%.

The group also said its forward sales position has strengthened further to £2.7bn. Housebuilding forward sales total £1.49bn and Partnerships' mixed tenure forward sales are £448m, with 83% of forecast FY21 total Housebuilding units and Partnership mixed tenure units secured.

Vistry said group month-end average net debt for 2021 is now expected to be less than £150m, below its previous target of less than £200m.

Chief executive Greg Fitzgerald said: "Vistry Housebuilding is firmly on track to deliver a significant step up in completions in FY21 and remains firmly focused on driving profitability to deliver the expected improvement in gross margin.

"Vistry Partnerships holds an exciting and unique market position and has a clear growth strategy. The business is making excellent progress towards its targets of increasing revenues from £728m last year to £1bn in FY22 accompanied by operating margin improvement to at least 10%."

At 1225 BST, the shares were up 1.4% at 1,314.51p.

Liberum, which rates the stock at 'buy', said: "The improvement in guidance was somewhat anticipated by the market as consensus was at £316m (Liberum estimate £323m), and management has said that its 2022 expectations are unchanged.

"We see 15% upside to our sum of the parts based valuation, based on 1.3x book for housebuilders and 15x PER for partnerships. It is interesting to note that we are one of three analysts valuing the shares on this basis, the other 15 have targets at or below the current share price."