Housebuilder Vistry has warned of further job losses and site closures as new chief executive Adam Daniels begins a sweeping restructuring of the business following a £661.3mn half-year loss and a sharp downgrade to its full-year profit expectations.
The group plans to save a further £50mn by cutting its regional operations from 25 to 12 and withdrawing from the private house sales market in the south-east of England.
The restructuring will make Vistry “much smaller but more focused”, Daniels said, with the group reducing its target for new home completions to about 12,000 a year.
The overhaul will affect Vistry’s workforce of about 4,150 employees, although the company has not disclosed how many additional jobs could be lost. About 350 employees have already left since the summer, including departures through a voluntary redundancy programme that delivered £25mn of savings earlier this year.
The latest cuts come as Vistry attempts to repair its balance sheet after a dramatic deterioration in its financial performance.
The company reported a pre-tax loss of £661.3mn for the six months to June 30, compared with a £40.9mn profit in the same period last year. The result included a £475mn write-down and a further £73.2mn provision for building safety work on high-rise properties following the Grenfell Tower tragedy.
On an underlying basis, Vistry reported a pre-tax loss of £83.3mn, compared with a profit of £80.6mn a year earlier.
The company also reduced its full-year underlying profit guidance to about £165mn, from a previous forecast of £200mn. That figure excludes a £40mn impact from delayed transactions and about £470mn of additional write-downs expected at the full-year stage.
The scale of the charges highlights the pressure facing Vistry as it attempts to reshape a business that has expanded rapidly in recent years while dealing with weaker housing activity, higher costs and significant building-safety liabilities.
Daniels, who took over the leadership of the group as it confronted the deterioration in its finances, is seeking to simplify the organisation and reduce the number of markets in which it operates.
The reduction from 25 regional businesses to 12 is expected to lower the group’s cost base while allowing management to concentrate resources on areas where it sees stronger returns.
Vistry will also exit private house sales in the south-east, a significant strategic retreat from a market that has traditionally been an important part of the UK housebuilding industry.
Despite the severity of the restructuring, Vistry said it did not expect to need to raise additional equity from investors. Its lenders have also agreed to waive certain banking covenants while the group carries out the overhaul.
That support provides the company with some financial breathing room as it absorbs the substantial write-downs and provisions expected later in the year.
The group’s immediate priority is to stabilise its finances and restore profitability rather than pursue the expansion targets that had previously underpinned its strategy.
Daniels said the changes would result in a business that was “much smaller but more focused”, with annual completions reduced to around 12,000 homes.
For employees, however, the turnaround comes at a significant cost. With hundreds already having left and further reductions expected, the restructuring represents one of the most substantial retrenchments in Vistry’s recent history.
The company now faces the challenge of proving that a smaller regional footprint, lower housebuilding ambitions and tighter cost controls can restore confidence while it works through hundreds of millions of pounds in exceptional charges.
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