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Investing.com -- Shares of Vistry Group PLC (LON:VTYV) fell by 2.3% on Wednesday following a trading update ahead of its Annual General Meeting.
Despite the company’s progress on executing key priorities and maintaining expectations for the year, investors seemed to react to a mixed report that highlighted a decrease in the forward order book and a reduction in land acquisition rates.
According to the update, Vistry Group’s sales rate has improved since the last announcement in March, currently standing at 0.91, up from 0.59, and averaging 1.32 over the past eight weeks.
However, the forward order book has dipped to £4.6 billion from £4.9 billion in the previous year, with units secured for delivery this year remaining flat at £2.1 billion. The company noted an increase in secured units to 72% of forecasted FY25 units.
The U.K. housing market shows signs of recovery with improved mortgage availability and expectations of further cuts to the Bank of England base rate, which Vistry anticipates will continue to bolster the Open Market sales rate.
The U.K. Government’s recent announcement of an additional £2bn in affordable housing funding is also expected to increase demand from affordable housing partners in the latter half of the year.
Despite these positive indicators, the company reported a continued low level of Partner Funded transaction activity, attributing it to investment constraints among Registered Provider partners.
Vistry expects Partner Funded volumes for FY25 to be similar to the previous year, with a stronger momentum going into FY26.
Cost pressures are another concern, with the company experiencing upward pressure on both material and labor prices. Vistry is proactively engaging with subcontractors and suppliers to mitigate these pressures and anticipates low single-digit build cost inflation for FY25.
Vistry Group remains focused on improving cash generation and retaining a strong financial position, with plans to reduce average net borrowing and refinance its Term Loan and Revolving Credit Facility during the summer.
Overall, Vistry Group is on track to deliver a year-on-year increase in profits in FY25, with a more significant H2 weighting expected, as previously guided. However, today’s stock movement reflects investor caution amid the mixed trading update.