Vistry says buyer confidence returning

Shares in Vistry have risen sharply after the housebuilder said consumer confidence was growing and its merger with Countryside was proceeding better than expected.

Announcing full year results for 2022, the housebuilder and partnerships housing provider, which pulled off a £1.1bn takeover of rival Countryside in November last year, added that it expected to increase profitability this year, despite the tough economic conditions.

Shares in Vistry traded up by more than 4% at one point after it said it now expected annual “synergy” cost savings from the merger with Countryside to total £60m, £10m more than previously targeted, and that annual “adjusted” pre-tax profit – prior to exceptional items – for the current year will top £440m, well above the £418m reported for 2022.

The firm also said that it had seen “an improving trend on private sales in the first 11 weeks of the year”, with private reservations in its housebuilding business having grown as high as 0.62 per site per week in the last four weeks, compared to 0.46 in the fourth quarter of 2022. The firm said weekly reservations per site for the year as a whole so far were running at 0.54. It said: “We have seen increased consumer confidence from Q4 2022, particularly as mortgage rates have trended downwards and availability has improved.”

The reservations figures for the last four weeks are ahead of the numbers seen in 2019, the last “normal” year prior to the pandemic, the firm said.

Vistry added it was also seeing a “good level of demand from Housing Associations and Local Authorities” in its partnerships housing business, and that its forward order book was 57% ahead of the same point last year, given the combination of Vistry and Countryside, at £4.18bn.

However, despite this positive outlook, Vistry as expected reported full year results impacted by the requirement to make provisions for fire safety repairs and the Countryside acquisition costs. The firm said its statutory pre-tax profit was £248m, down 22.5% on 2021, with the figure including a £97.0m fire safety provision and £56.9m in transaction and integration related costs. Statutory revenue was £2.73bn, up 13.4%, with the addition of the Countryside business making just a minimal impact on the numbers.

The firm said the partnerships business will in future make up more than half of the revenue of the organisation, and was on course to grow revenue this year in line with its strategy.

Greg Fitzgerald, Vistry chief executive said 2022 was a “landmark year” for the group despite the challenging market conditions experienced in the fourth quarter, with the combination with Countryside creating one of “the country’s leading homebuilders”.

He said: “The businesses have come together extremely well with a good cultural fit, and the integration process is making excellent progress. As a result, we are confident of delivering annualised synergy benefits of c. £60m, ahead of our original target.

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“Market conditions are improving and based on the assumption that private sales rates continue to trend towards levels seen in 2019, we expect Group adjusted profit before tax for FY23 to be in excess of £440m.”

The firm also confirmed the retention of the timber frame factories formerly owned by Countryside, first reported by Housing Today, which came over as part of the deal. It said it had branded the three factories as Vistry Works, with the two existing operational facilities in Warrington and Leicester having the capacity to deliver 2,800 homes to the business in the current financial year.

It said the third facility, a vast new build unit in the East Midlands which Countryside had decided to sell prior to the merger, will be re-opened in the second half of this year, with the capacity to produce 5,000 homes per year.

The firm said: “Establishing good working relationships between the business units and Vistry Works is a priority”, adding that a framework had been put in place to improve coordination between factories and individual business units to ensure factory capacity is fully utilised.

Vistry also announced the appointment of a new board member, Jeffrey Ubben, who is founder and managing partner of Inclusive Capital Partners, a San Francisco-based investment firm that became one of Vistry’s largest shareholders following the takeover of Countryside. The activist investment firm was a major shareholder in Countryside and last year made two attempts to takeover the firm, before throwing its weight behind the Vistry deal.

Ubben is currently a non-executive director of ExxonMobil and Enviva Inc.

Ralph Findlay, Vistry non-executive chairman, said: “I am very pleased to welcome Jeff to the Board. His deep expertise and insights, particularly in impact and sustainability, will be of significant value as we continue to integrate our recent acquisition of Countryside Partnerships at pace.”

Inclusive holds just under 6% of the shares in Vistry.