By Raechel Thankam Job
(Reuters) -British homebuilder Vistry on Thursday said it expects a near 34% slump in adjusted pre-tax profit for the first half of 2025, but backed its forecast of annual profit growth due to increased government funding for affordable homes.
Britain’s construction industry has been slowly recovering after high interest rates and a property transaction tax pressured developers, with recent signs of stabilising borrowing costs and increased government support fuelling cautious optimism.
Last month, British finance minister Rachel Reeves announced an additional 10-billion-pound ($13.58 billion) investment to build thousands more homes, under her first multi-year spending review.
The funding and other initiatives are expected to boost new contracts with affordable housing partners in the second half of 2025, with this momentum expected to carry into 2026, Vistry said.
“Whilst we have seen some periods of improvement in open market demand, affordability challenges, particularly for first-time buyers, have persisted with expected interest rate cuts being pushed further out,” it said in a statement.
While demand may recover and support revenue, Vistry’s profit margins are likely to remain under pressure as it pursues bulk affordable housing deals in a challenging market environment, Investec analyst Aynsley Lammin said.
The company, which focuses on affordable housing, has been accelerating discounting and bulk selling to boost cash. Its net debt stood at about 295 million pounds at June end, compared with 322 million pounds a year ago.
Vistry shares jumped by as much 5.4% early on Thursday, but later see-sawed between flat and marginally lower in volatile trading.
The company expects adjusted pre-tax profit for the first half of 2025 to fall to 80 million pounds ($108.8 million) from 120.7 million pounds a year ago because of rising costs.
Vistry, which did not pay a final dividend last year to cut expenses, said it continues to expect a low single-digit percentage rise in operating costs this year.
($1 = 0.7350 pounds)
(Reporting by Raechel Thankam Job in Bengaluru; Editing by Sherry Jacob-Phillips, Louise Heavens and Tomasz Janowski)
