Vistry Group Plc said it’s cutting hundreds of jobs as part of the housebuilder’s plan to solely focus on building homes for affordable housing providers and lowered its profit guidance for the year. Shares dropped.
The restructuring — first announced last month — will see the company’s headcount reduce by about 200, according to a statement Monday. The company had warned of job cuts in September, given the reduction of five regional business units, but hadn’t specified a number.
The Kent-based company expects about £25 million ($30.4 million) in annualized cost savings from the integration of partnerships and housebuilding. It also sees adjusted profit before tax of £410 million for the current financial year, about £40 million lower than the previous guidance on account of a rise in pre-sale elements and discounts.
Shares tumbled as much as 5.5% in early London trading on Monday, the biggest intraday loss in more than two weeks.
Read more: Homebuilder Vistry to Cut Hundreds of Jobs Amid Housing Drop
While some are betting the Bank of England may now be at the tail end of its hiking cycle — which has seen officials deliver the sharpest series of rate rises in three decades — mortgage rates still linger at levels close to 6%. This, paired with the dramatic rise in the cost of living, has sapped demand for homes from prospective buyers.
Faced with declining private house sales, Vistry announced last month it would be focusing solely on constructing homes for affordable housing providers and rental landlords, shifting to a model whereby it partners with the likes of land owners and housing associations to redevelop plots of land. The firm had already been building out its partnerships business following the acquisition of Countryside in 2022.
The job cuts announced on Monday are separate from the approximate 4% reduction in roles linked to the Countryside purchase, the company said.
Vistry said the typical seasonal increase in private sales since September had so far failed to materialize. The group’s average weekly sales rate since July 1 has been 0.60, compared with 0.64 in the same period a year ago.
Open market housing “remains tough, and it didn’t see the usual autumn/back to school pick-up in sales,” RBC Capital Markets said in a note Monday. “It is therefore having to try harder to sell homes,” it said, adding profit margins are lower in its partnership business.
Read more: Bellway Sees Sales Slide as Mortgages Weigh on UK Housing
The declines are in line with recent announcements by rivals. Bellway Plc said last week it expects sales to slump further in the coming year as high mortgage costs and inflation deter buyers. That’s after Berkeley Group Holdings Plc said a month earlier it was halting investments in new projects.
--With assistance from Sam Unsted.
(Updates with shares.)
