Shares in Vistry fell sharply on Thursday after the housebuilder unveiled a £661.3m half-year loss and plans to dramatically shrink the business.

The group swung from a reported pre-tax profit of £40.9m a year ago to a £661.3m loss in the six months to June. On an adjusted basis, Vistry recorded an £83.3m loss, against an £80.6m profit last year.

Investors initially sent the shares down by more than 10%. They subsequently recovered some ground to close 3.1% lower at 259.6p. The shares have now lost almost 60% of their value this year.

The results included a £475m goodwill write-down and an additional £73.2m provision for building safety costs.

Meanwhile, net debt climbed to £468.8m from £293.1m a year earlier. Completions also fell 8% to 6,304 homes, while adjusted revenue dropped 9% to £1.7bn.

Vistry to shrink housebuilding operation

New chief executive Adam Daniels has now set out a major overhaul of the business.

Vistry plans to reduce its regional operations from 25 to 12 and target around £50m in additional annual overhead savings.

The housebuilder will also scale back its longer-term output ambitions. It plans to operate as a business delivering around 12,000 homes annually, rather than pursuing previous ambitions for substantially higher volumes.

The restructuring marks a significant change of direction following a review launched after Daniels took over as chief executive in April.

Vistry will also withdraw from private open-market sales in the South East. Instead, it intends to focus its activity in the region on partner-funded housing.

The group has already secured £25m of savings through a voluntary exit programme and recruitment freeze. Further job losses are expected as Vistry pursues the additional £50m savings target.

Private housing sales under pressure

Vistry said open-market conditions became more challenging during the summer.

Its private sales rate slowed to 0.3 reservations per outlet per week. The company pointed to weaker consumer confidence, affordability pressures and wider economic uncertainty.

The housebuilder has also discounted some completed homes to generate cash.

At the same time, Vistry has reduced its full-year adjusted pre-tax profit forecast to around £165m.

The changes come despite Vistry securing a £350m government grant under the Social and Affordable Homes Programme.

Vistry says the funding will support the direct delivery of more than 3,000 affordable homes, with construction already under way.

‘Things here are absolutely fixable’

Daniels acknowledged problems with the group’s previous expansion strategy.

He told analysts: “The rapid M&A caused us some challenges, but things here are absolutely fixable.

“We acknowledge that the execution of our model since 2023 [hasn’t] all gone as we planned, but there is very good reassurance in the work we’ve done that the models worked excellently in some areas, despite the difficult market conditions we’ve had.”

Vistry now intends to rebalance its business towards roughly 60% partner-funded housing and 40% open-market sales.

Daniels said the business would become smaller and simpler, with a greater focus on cash generation and reducing debt.

He said: “The business will therefore be resized, simplified and repositioned to deliver lower leverage, stronger cash conversion and more sustainable returns.”