Vistry has issued a profit warning after discovering that build costs on nine schemes at its southern division have been under-estimated by around 10%

This morning in a trading statement the firm said the impact was limited to nine schemes, including some large developments, out of 46 schemes being built by the southern division.

Vistry said it has now launched a full investigation into the cause and changes have been made to the Southern division management team.

In the statement, the partnerships housing specialist said:  “The estimated one-off impact of adjusting for the revised development cost assumptions reduces the board’s expectations for adjusted profit before tax for FY24 by £80m, for FY25 by £30m, and FY26 by £5m.”

The revision in total full life cost projections is now expected to lower forecast pre-tax profit for 2024 to £350m.

“We believe the issues are confined to the South Division and changes to the management team in the division are underway.  We are commencing an independent review to fully ascertain the causes, ” said a spokesman.

Vistry continues to expect to deliver total completions of more than 18,000 units this year and continues to target a net cash position compared with a net debt £89m in 2023.

It added that Vistry remained committed to the £130m share buyback programme announced last month.

The firm said: “Notwithstanding the one-off adjustment announced today, we remain committed to delivering a strong increase in high quality mixed tenure housing, our medium-term target of £800m adjusted operating profit, and £1 billion of capital distributions to shareholders.”

The value of Vistry shares plunged a third on the news in early stock market trading.