Vistry has issued a second profit warning in as many months as the housebuilder blamed increased cost overruns and slow market conditions.

The group had previously reported “systemic” problems at nine of its housebuilding projects in its south division, which has now lowered its pre-tax profit expectations by £50m to £300m.

Vistry revealed last month that it had “understated” its total build costs by around 10%, which it said at the time would reduce profits by £115m over the next two years.

However, the housebuilder has today stated that the profit impact of the issues in its south division will reach £25m in FY24, £20m in FY25 and £5m in FY26 – taking the total impact on its earnings to £165m.

Reuters reported that shares in the FTSE 100 listed housebuilder sunk by up to 21% following the trading update this morning.

Equity analyst at Hargreaves Lansdown, Aarin Chiekrie, said that following on from last month’s announcement, Vistry’s problems were “worse than realised”.

“An independent review found that the issues in the south stemmed from insufficient management capability, non-compliant forecasting processes and poor divisional culture,” Chiekrie commented. “This highlights the pressure being felt internally to navigate the operational changes as the group’s new business model finds its feet.

“Alongside the Government’s changes to national insurance contributions, that will put further pressure on profits. The three-year share buyback programme remains ongoing for now, but don’t be surprised to see this take a hit in the near future, further hurting investor returns.”

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