Watkin Jones has reduced its profit guidance for the next financial year as the pace of its recovery has been "slower than expected".

The buy-to-let (BTL) and student accommodation developer has made cuts to these expectations, despite a drop in the UK interest rate and forecast future, which is expected to contribute to improved forward fund liquidity.

The firm had previously set out in previous results that it had a number of schemes being “actively marketed”, which included the sale of a student accommodation development in Stratford, London, announced in July.

However, it said: "Overall market activity through the summer has been slower than anticipated, principally due to the continued uncertainty over the pace of interest rate cuts, and as such we believe it is now unlikely that we will close any further transactions before the financial year end.

"The group has continued to execute effectively on its broader operational objectives during the second half of the year. Encouragingly, our new Refresh initiative is gaining good traction in the market with our first project completed and we are seeing a growing pipeline of opportunities. Our in-build schemes continue on track, with two further practical completions expected in this financial year."

Despite this lack of completions, Watkin Jones expects to show "material improvement" in the 2024 financial year, with operating profit currently expected to be between £10m-12m.

This follows an operating profit of £200,000 in the 2023 financial year.

The firm added that it has been "effective" in its focus on cash generation through the second half, with gross cash expected to be around £80m, while net cash is anticipated to be £65m, ahead of previous expectations.

Despite this recovery, it said that the lower number of transactions in the 2024 financial year, will have a "consequential" impact on the 2025 results.

Therefore, the group has said that the operating profit for the 2025 financial year will not be above that of the operating profit in 2024.

However, it said that while it is possible to deliver on year-on-year progress in the 2025 financial year, this would require market conditions to improve as a faster pace.

The firm added: "We continue to actively review opportunities to expand our longer-term pipeline and are seeing an increasing number of attractive potential opportunities in the land market and through alternative transaction structures, which will be important in driving profitability in FY26 and FY27.

"While the group's robust net cash position provides it with a strong financial underpin for its committed spending requirements, it is nevertheless a limiting factor on the extent to which we can take advantage of market conditions and further develop our pipeline. In light of this, the Board is undertaking a review of a range of options that may be available to enhance its medium and longer term funding position, thereby allowing the group to capitalise on a market recovery."

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