Housebuilder Vistry has warned first-half profits will be sharply lower as it looks to boost flagging demand amid the Iran war with incentives and discounts.
The group said house sales have eased back in recent weeks due to uncertainty caused by the Middle East conflict, though year to date open market sales remain around 30% higher year on year.
It is also seeing material prices start to rise and labour costs increase, which it said is set to continue into the second half.
Vistry said it was boosting the use of incentives and discounts, in particular on low-margin properties and developments near to completion.
“Primarily due to the up-front profit impact of the actions to accelerate cash generation … we expect first-half profit to be significantly lower than the prior year,” it cautioned.
But it expects to hold second-half profits flat year on year, with full-year underlying pre-tax profits set to come in towards the middle of the expected range of £168 million to £283 million, signalling a drop in earnings.
It reported underlying profits of £268.8 million for 2025.
Figures last week from lender Halifax showed house annual price growth halved month on month in April to 0.4% as rises in living costs and higher mortgage rates led to more caution among some households.
Prices fell by 0.1% during the month, following a 0.5% fall in March, according to the Halifax index.
Vistry’s new chief executive Adam Daniels, who replaced former executive chairman Greg Fitzgerald at the helm last month, is carrying out a review of the group, with the results set to be outlined alongside interim results in September.
The group said: “The board and our new chief executive, Adam Daniels, remain fully committed to the partnerships strategy and the key role our differentiated model can play in delivering the huge need for new housing across the country.”
Shares in Vistry slumped 12% in morning trading on Wednesday as the group also said it would pause its share buybacks to prioritise debt reduction.
AJ Bell investment director Russ Mould said: “Prioritising cash generation over profit looks a sensible decision for a company carrying a meaningful amount of debt.
“However, it does mean first-half earnings will be substantially lower year on year as the company sells its open market homes at a discount to clear inventory.
“There have also been delays on its affordable housing partnerships projects as the industry goes through a period of transition.”
He cautioned there may be further downgrades on the horizon if the Iran war disruption continues.
He added: “Rising costs associated with the inflationary pressures unleashed by the Iran conflict are a wildcard factor over which Vistry has little control.
“A lot might now ride on Mr Daniels’ strategy update in September after he’s had a chance to fully review the group and its operations.”
