Vistry profit warning hits shares
A cut in operating margins is likely to have wiped £40 million off Vistry’s expected pre-tax profit for the full year taking it down to £410mln.
Inflation has impacted the business across the board with increases in both materials and labour costs while at the same time consumers are increasingly unable to bear the higher mortgage costs from borrowing. Vistry also says it will cut 200 jobs from its payroll of approximately 4,800.
(AI Video Transcript)
Vistry's profits
Vistry, a property development and house building company, has recently released a video sharing some not-so-good news about their profits. They have mentioned that their profit margins for the year will be lower than they expected, resulting in less money before taxes. To make matters worse, they are also planning to cut 200 jobs as a way to save money due to a decline in the industry.
Stock price outlook
Vistry had initially hoped to make around $450 million in profit, but now they think they'll only make about $410 million. This drop in profit is because they expect to make less money from the sites they are working on this year. They have already seen a decrease in the number of homes sold during the summer and they think this will continue into the rest of the year. Because of all this bad news, their stock price has dropped by about 5.2% and is now at its lowest point since July 17th.
The long-term effects of high interest rates
Even though Vistry had been doing pretty well lately, they had a sudden increase in September which was followed by a decline. People are starting to worry about what the long-term effects of high interest rates will be on how affordable it is for people to get a mortgage. Additionally, potential buyers are not very happy about the high prices that house builders like Vistry are charging because of the increases in the industry. This has made some analysts believe that Vistri will have a tough time during the autumn and winter months.
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