Release Date: March 26, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Total completions increased by 7% to 17,225, making Vistry Group PLC (BVHMF, Financial) the largest house builder in the country by volume.
- Partner-funded projects rose by 18%, showcasing strong relationships and team efforts.
- Adjusted revenues increased by 7% to GBP4.3 billion, with average selling prices on the private side remaining firm.
- Vistry Group PLC (BVHMF) maintained a 5-star house builder rating for the sixth consecutive year and won over 70 site quality awards.
- The company is well-positioned to benefit from the government's GBP2 billion investment in affordable housing, aligning with its partnership strategy.
Negative Points
- The company significantly underperformed its financial targets, with a reported adjusted profit before tax of GBP263.5 million, impacted by issues in the South division.
- Operating margin was down significantly due to South division issues and a transition to the partnership strategy model.
- Profit before tax and EPS both decreased by 35%, with reported profit before tax down more significantly due to exceptional costs.
- Net debt increased to GBP180 million, influenced by South division issues and year-end delays.
- The company faced a shortfall at year-end from delays in partner agreements and commercial transactions, leading to a buildup of work-in-progress and stock.
Q & A Highlights
Q: Can you provide more clarity on the H1-H2 split and the expected recovery in H2?
A: Greg Fitzgerald, CEO, explained that the recovery in H2 is mainly due to the GBP2 billion and GBP800 million previously announced funding coming through in the second half of the year. Private sales are expected to come through, but likely at a lower margin in the first half compared to the second half. Tim Lawlor, CFO, added that there is typically a higher weighting of private sales in the second half, which will also benefit from operating leverage as fixed costs are more covered.
Q: What are your expectations for land creditors this year and next?
A: Tim Lawlor, CFO, stated that land creditors are expected to increase, depending on the amount of land purchased in the second half of the year. He anticipates a slight increase from the half-year levels, potentially growing by GBP50 million to GBP100 million by the end of the year.
Q: How do you plan to manage the return to low single-digit build cost inflation?
A: Greg Fitzgerald, CEO, mentioned that the company is confident in managing build cost inflation, particularly on the partnership side, where inflation is built into margins and appraisals. The company is still receiving competitive bids from subcontractors due to the certainty of work provided by Vistry. However, some single-digit inflation is expected on housebuilding sites.
Q: Can you provide an update on the large PRS deals with Blackstone and Leaf?
A: Greg Fitzgerald, CEO, reported that all the deals are identified and on-site, with about 50% of the way through the overall contract. This includes homes delivered and working.
Q: What is the status of the systems harmonization approach?
A: Tim Lawlor, CFO, explained that Vistry operates on a single ERP system called COINS, which is common across the housebuilding sector. The harmonization process involves ensuring all business units are on the same instance within the system, with most expected to be completed by June.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
