UK's Vistry sees cheaper homes business boosting profit

  • 2022 adj pretax profit 418 mln stg vs forecast 411 mln
  • Sees 2023 adj pretax profit over 440 mln pounds

March 22 (Reuters) - British homebuilder Vistry (VTYV.L) said on Wednesday conditions were improving in the sector, as it forecast at least a 5% rise in 2023 profit, buoyed by demand for its cheaper homes.

A jump in mortgage rates and fears of an economic downturn have hit Britain's housing market, although there has been an uptick in confidence among buyers recently.

Vistry Group said it saw an improved sales trend in the first 11 weeks of its new fiscal year, with year-to-date average private sales rate per site per week at 0.54, and the rate increasing to 0.62 in the last four weeks.

The sales rate was 0.46 in the fourth quarter of 2022, although 0.71 for the entire year.

The FTSE midcap (.FTMC) firm, which works with local authorities and housing associations to build affordable homes through its Partnerships business, said it expected group adjusted profit before tax for this year to top 440 million pounds ($539 million).

"Fiscal year 2023 could be a seminal year for Vistry as a softer housing market provides an opportunity for the Partnerships business to stand out," said Peel Hunt analysts in a note.

Vistry, which has become a major housebuilder in Britain after buying rival Countryside last year, said the merger had boosted growth at Partnerships and was confident of achieving annualised synergy benefits of about 60 million pounds, up from a previous target of 50 million pounds.

The company posted a roughly 21% jump in adjusted pretax profit to 418.4 million pounds for the year ended Dec. 31, beating analysts' average estimate of 411.1 million pounds, according to Refinitiv Eikon.

However, Vistry cut its final dividend payout to 32 pence per share from 40 pence a year earlier, reflecting the overall challenging conditions in the sector.

($1 = 0.8165 pounds)

Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Subhranshu Sahu and Mark Potter

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