UK housebuilder Vistry cuts jobs and downsizes following £661m loss

UK housebuilder Vistry cuts jobs and downsizes following £661m loss The troubled construction firm will withdraw entirely from private home sales across the South East - Bookmark - CommentsGo to comments Become an Independent member to bookmark this article Already a member? Log in Vistry has cautioned that further redundancies are on the horizon as the housebuilder targets an extra £50 million in cost savings, following a half-year loss exceeding £660 million and a downgraded profit outlook for the full year. To revive the struggling business, the group's new boss Adam Daniels outlined major restructuring plans. These include downsizing the company’s regional divisions from 25 to 12 and withdrawing entirely from private home sales across the South East. While Vistry has declined to specify the exact number of positions at risk among its 4,150-strong workforce, the restructuring will result in additional job cuts alongside the closure of several sites. Since the summer, approximately 350 employees have already departed the business, partly driven by a recent voluntary redundancy scheme that generated savings of £25 million earlier in the year. The fresh drive to reduce expenses follows a reported pre-tax loss of £661.3 million for the six months ending 30 June, falling from a £40.9 million profit over the same period last year. The sharp decline comes after taking a £475 million write-down and setting aside another £73.2 million for building safety work on high-rise structures in the wake of the Grenfell Tower tragedy. On an underlying basis, it reported pre-tax losses of £83.3 million against profits of £80.6 million a year earlier. Vistry gave an alert over its full-year outlook, cutting its guidance to around £165 million from a previous forecast of £200 million, but this is excluding a £40 million hit from delayed deals and some £470 million in write-downs expected at the full-year stage. The group looked to reassure that it did not expect to need to launch an investor cash-call and has the support of lenders, who have waived certain banking covenants due to the swingeing overhaul announced. Mr Daniels said the actions will see the business become much smaller but more focused, slashing its new homes target to around 12,000 completions a year. Dan Coatsworth, head of markets at AJ Bell, believes that a recent award of funds from the UK government’s affordable housing scheme represents a show of faith in the business. He said: “News of a strategic review would have been ringing alarm bells for beleaguered Vistry shareholders and, sure enough, one of the outcomes of said review is a chunky profit warning. “Having posted a hefty first-half loss, the company has lowered full-year profit expectations as it plans to substantially downsize the business and makes significant provisions for the costs of restructuring. “The positive news is that recently appointed boss Adam Daniels is grasping the nettle with both hands as he looks to right a business which has been suffering badly from stock market subsidence in recent years. Vistry has been hit by cracks in the foundations of its regeneration and social housing focused model and due to accounting failures in its Southern division. Balance sheet concerns have added to the mix of late, too. “The problem for Daniels is that he is not fixing the roof while the sun is shining but instead when it is pouring with rain, thanks to rising costs and a struggling property market affected by rising borrowing costs. “One bright spot amid the gloom is the recent award of funds under the UK government’s affordable housing scheme, which represented a show of faith in the business.” Join our commenting forum Join thought-provoking conversations, follow other Independent readers and see their replies Comments