Vistry Group Plc (VTY) Ordinary 50p

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Vistry’s full-year revenue moved 2% lower to £4.2bn. This comes as a 3% rise in average selling prices to around £282,000 and roughly £200mn of land sales weren’t quite enough to offset a slowdown in average weekly sales rates from 1.07 to 0.96.

Completions were 9% weaker than expected as the group built around 15,700 new homes (2024: 17,225). The order book declined from £4.4bn to around £4.0bn.

Net debt improved from £181mn to around £145mn.

Full-year underlying pre-tax profits are expected to improve from £264mn to around £270mn, broadly in line with market forecasts.

In 2026, Vistry expects ‘increased activity’, with performance weighted to the second half. Markets are currently forecasting underlying pre-tax profits to rise to around £317mn.

The shares fell 4.3% in early trading.

Our view

Vistry’s full-year results weren’t the finished product, but it was a step in the right direction. Weaker-than-expected sales volumes weighed on the top line and disappointed markets on the day, but land sales helped to pick up some of the slack. That saw profits in 2025 edge slightly higher, and further progress is expected in 2026.

At its heart, Vistry’s Partnership model specialises in providing affordable housing by teaming up with local authorities and housing associations. These partners foot most of the bill, which frees up Vistry’s cash to deploy on more projects across the business and drive faster-than-average growth.

The government’s pledge to invest an unprecedented £39bn in affordable housing over the next decade marks a significant step up in funding. With this money beginning to flow, partner-funded activity is picking up. We think Vistry looks better-positioned to benefit from this tailwind than many of its peers. But it’s likely to be a slow-burning opportunity rather than a quick win.

The huge order book, standing at a mammoth £4.0bn, is a real asset. Vistry’s huge scale allows it to negotiate harder on prices of building materials, which should help it navigate build cost inflation better than most of its peers.

Despite the long-term positives, there are still plenty of issues the group needs to iron out. A series of profit downgrades at the tail end of 2024 has raised serious questions about the group’s new structure and internal controls. That seriously hurt the company's valuation, and there’s a lot of work to be done to win back investors’ trust.

Vistry’s partnerships model also tends to have a lower margin than ordinary housebuilding projects. While selling these houses as part of bulk deals brings more cash in the door in one go, it puts further downward pressure on selling prices, meaning there’s little room for error. Recent sales volumes haven’t been as strong as markets were expecting, and unless they pick up soon, the market’s forecasts for profit growth this year look too optimistic to us.

The balance sheet isn’t in great shape either, sporting a net debt position compared to many peers holding net cash. The picture is improving, helped by land sales and the halt in dividend payments. But shareholder returns aren’t the main focus right now, and there’s no guarantee that dividends will return this year.

Vistry looks well-positioned to benefit from government support for affordable housing. But management missteps have shaken confidence in the group’s profit targets. While the worst is likely behind the group now, we’d like to see concrete signs that demand’s ramping up as expected before getting too excited.

Environmental, social and governance (ESG) risk

Most housebuilders are relatively low risk in terms of ESG, particularly for those in Europe. However, there are some environmental risks to consider, from direct emissions to the impact of their buildings on the local ecology. The quality and safety of their buildings is also a key risk.

According to Sustainalytics, Vistry’s management of ESG risk is strong.

It doesn’t disclose its greenhouse gas reduction initiatives, but it has set itself targets and deadlines. And its reporting of direct and indirect emissions is in line with best practice. However, there’s currently no disclosure of an established product and safety programme or disclosures around recycled material usage.

This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by LSEG. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.

This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment.

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