Vistry Group has seen its shares drop by almost a third as it warned its profits were set to drop by a fifth.

The FT has reported that shares fell by 30% in early trading, after the housebuilder stated that its 2024 adjusted pre-tax profit is set to drop by £80m to £350m.

Furthermore, Vistry is set to lose a further £35m over the next two years from this profit.

In its trading update, Vistry said the fall was a result of its south division understating the total build costs to complete nine of its 46 developments by around 10%.

However, it did add that the issues are "confined to the south division" and that changes to the management team in the division are underway, with the firm commencing a review to "fully ascertain the causes".

In the 2024 financial year, Vistry still expects to deliver over 18,000 unit completions and continues to target a net cash position by the end of 2024, following net debt of £88.8m at the end of 2023.

Investment director at AJ Bell, Russ Mould, said: "Vistry had been quietly eking out a strong reputation with the market over recent years but today’s news has done a lot of damage to its credibility with investors.

"The scale of the understatement of build costs in its south division is jaw-dropping and it’s not a surprise to see that changes in the management of that division are underway. This issue is going to affect profit across the next three years and the reputational issues may even last beyond that.

"Today’s revelations will obscure the strategic progress of the business. Up to now, under CEO and industry veteran Greg Fitzgerald, its focus on regeneration and affordable housing, supported by the £1.3bn acquisition of Countryside Properties in 2022 and a 2020 merger with relevant businesses previously owned by construction firm Galliford Try, has proved something of a winner."

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