Vistry PLC (LON:VTY) has said it expects to see a strong recovery in profits over the rest of the year and into 2021 after a marked improvement in trading since May.
House reservations have rebounded strongly since the lockdown was eased said the FTSE 250-listed housebuilder, which was formed from the merger of Bovis and Linden Homes.
Sales since July are up 20% at an average 0.73 per site per week, the group said, with prices firm, minimal cost inflation and savings to come through in the second half of the year.
The company’s latest tone was a contrast to the first half where it reported a loss of £12.2mln in the six months to end-June 2020 as completions fell by 63% on a pro-forma basis following the merger due to the impact of coronavirus lockdown restrictions.
Housebuilding revenues were £349mln over the half-year compared to a pro-forma £834mln a year earlier.
Orders though are now at a record £2.7bn and Vistry sees profits for the full year in a range of £130mln-£140mln and rising to £310mln in 2021 if conditions remain largely unchanged.
Vistry said it intends to reduce current borrowings to get its gearing ratio down to 35% by the end of 2021 and also to resume dividend payments in that year.
In a statement, Greg Fitzgerald, Vistry’s chief executive, added: “The Group is well-positioned to capitalise on the opportunities available in the second half and into 2021 when we expect to deliver a step-up in completions and profitability, a reduction in gearing and a return to dividend payments.”
Tough first half says broker
Peel Hunt added it had been tough first half with results badly impacted by the lockdown, but with the Linden/Galliford businesses are fully integrated and the synergies now expected to be £44m, up from the initial £35m estimate.
“The shares have lagged the sector and are down -53% year-to-date vs a -25% average decline for the sector.
“Over the last three months they are off -26% vs -7%. Given the positive update today we expect this gap to be materially closed, especially as the shares are trading on a 21% discount to TNAV at the end of June (802p). The group’s main peers are all trading 15-25% higher”
Shares eased 2.8% to 618p.
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