Housebuilder Vistry has warned 200 jobs will be lost and expected profits will be hit by £40m as it struggles with a slowdown in private sales.
The company, which sparked anger earlier this month when it wrote to subcontractors demanding a 10% price cut on existing and future contracts, has overhauled its internal structure to reflect a strategic shift towards partnerships of social housing.
In a trading update published today, it said the jobs would be axed following a restructuring that would reduce the group’s regional business units from 32 to 27, saving £25m a year.
The job cuts are on top of a reduction in charges of around 4%, which came after Vistry acquired Countryside for £1.27bn last year.
Vistry has also cut its annual profit forecast from £450m to £410m to reflect a reassessment of margins on its construction sites as a result of increased pre-sale offers and discounts.
In an email asking for the 10 per cent discount last month, Vistry told suppliers that its decision in September to abandon private housebuilding in favor of affordable housing deals with local authorities and housing associations meant it could provide “greater visibility into future workloads a [its] supply chain partners”.
He said the discount sought was justified as there was a “responsibility of supply chain partners… [to] balance the opportunity offered by the continuity of work with greater efficiency”.
An industry leader said Vistry, which has paid out hundreds of millions in dividends over the past three years and recently moved to increase chief executive Greg Fitzgerald’s pay, should “hang its head in shame”.
However, in today’s update, the company described its discussions with suppliers as “productive”, saying greater clarity on future sales meant more stable subcontractor workloads and ultimately the delivery of more homes.
“We appreciate the productive discussions we have had over the last few weeks with our key supply chain partners to agree cost reductions for all our existing and future contracts,” he said.
“With a high level of visibility into advance sales, build programs and revenue in the partnership model, we can offer greater business continuity to our suppliers and, by working with them, we can increase the overall delivery rate at our sites and the supply of much. -They needed affordable mixed-tenure housing.”
