Vistry Group, formerly FTSE 100 member Bovis Homes, is facing significant financial pressures, including demands for payment deferrals and discounts from suppliers across at least two pivotal regions (Essex and the South West), with speculation these demands are widespread. The housebuilder, one of the UK's largest, has reportedly halted payments to some suppliers as it grapples with a cash squeeze. A Vistry spokesman stated the company is working closely with its subcontractor and broader supplier network to manage costs and ensure continuity of work. The company's share price has dropped by over 40% in the past month, fueled by concerns over its indebtedness and off-balance-sheet liabilities, with one analyst noting a significant increase in the "going concern" note in its accounts, painting a bleaker picture.
Vistry's financial situation is further complicated by delays in the government's £39 billion affordable housing program, which it relies on heavily. Funding, initially expected in April, is now not anticipated until October at the earliest, exacerbating the company's financial strain. Vistry is one of two housebuilders designated "strategic partner plus," making it eligible for up to £700 million in taxpayer funding. However, the delay in receiving these funds is creating liquidity issues. The company also recently issued its second profit warning in a month, revising its adjusted profit before tax for the year ending December 31 to about £300 million, down from an earlier forecast of £350 million. This has led to its shares tumbling by up to 21%.
In addition to these financial woes, Vistry has requested a 10% reduction on existing and future contracts from its subcontractors, citing softening economic pressures and the need for efficiency. This move has sparked anger in the construction sector, with some industry figures questioning the fairness of such demands, especially given that inflation on existing contracts has been over 23%. Analysts like Aynsley Lammin of Investec have pointed out that Vistry's cautious outlook and cost overruns offer insights into the broader housing sector's challenges. The company has also offered voluntary redundancy to staff and slashed its annual construction targets by 500 units to 17,500 homes.
