Vistry Group plc (LON:VTY) experienced a sharp decline in early London trading on Thursday, with shares falling 6.89% to 249.55 pence by 08:49 BST. The drop came after the housebuilder unveiled a comprehensive reset plan involving approximately £470 million in charges and a reduction in its 2026 adjusted profit forecast.
The company now expects adjusted pre-tax profit for 2026 of around £165 million, down from the £200 million consensus figure used in July. This £35 million reduction reflects a £40 million impact from renegotiating partnership deals to secure better terms, partially offset by other adjustments. The reset also includes temporary covenant waivers from its lenders, which have agreed to suspend interest-cover tests for fiscal 2026 and the first half of 2027.
Chief Executive Adam Daniels emphasized that the company does not anticipate any need to raise equity, despite the significant restructuring. The plan involves consolidating operating regions from 25 to 12 and reducing the owned land bank by approximately 29%, from 51,000 plots to 36,000 plots. These measures are designed to strengthen the balance sheet and improve cash flow, which has been under pressure as first-half net debt surged 60% to £468.8 million.
The first half of 2026 proved challenging, with Vistry reporting an adjusted pre-tax loss of £83.3 million, compared to a profit of £80.6 million in the same period last year. Adjusted revenue declined 9% to £1.70 billion, and total completions fell 8% to 6,304 units. The adjusted operating margin turned negative at -2.1%, down from 6.7% a year earlier, reflecting discounts on open-market homes and early review actions.
Current trading conditions remain subdued, with open-market reservations slowing to just 0.3 per outlet per week during the summer. However, the revised order book of £3.3 billion covers 91% of expected 2026 sales, providing some visibility. The company also received a £350 million affordable-housing grant and is working with 29 of its 33 initial strategic partners, which could support more than 3,000 homes.
The five-year plan targets £75 million in annual overhead savings and a 12% operating margin, with average daily net debt expected to fall to near £300 million by 2029. These targets depend on profitable land releases and successful renegotiation of partner deals, rather than simply reducing construction activity.
Analysts remain divided on Vistry's prospects. RBC Capital's Anthony Codling maintains a Sell rating with a 180-pence target, implying 28% downside, while Goldman Sachs' Rebecca Parker rates the stock a Buy with a 355-pence target, suggesting 42% upside. Other analysts, including UBS and Jefferies, have Hold ratings with targets ranging from 274 to 300 pence.
The market's reaction underscores that the balance sheet, rather than housing demand alone, is now the primary driver of Vistry's stock. The covenant waivers provide temporary relief, but they reduce the buffer against further delays. Investors will look to the next trading update on November 5 to assess whether renegotiated deals support the new profit guidance and the projected neutral year-end cash position.