Vistry Group PLC (LSE:VTY) shares fell over 14% on Friday after warning a hit to profits from understated build costs in its South division would be greater than first thought.
A review into the issues found profit would be impacted by a further £25 million this year, £20 million next and £5 million in 2026, taking the total impact to £165 million.
“The increase reflects additional developments where the total full-life cost projections to complete the development were understated, and a reduced expectation of 2024 activity across the South Division,” Vistry said on Friday.
Vistry first revealed the problems relating to underestimated costs across nine housing developments in its South division last month, warning of a £115 million hit at the time.
These were said to now reflect a total of 18 sites in the South division where full-life costs had been adjusted by more than £1 million.
Adjusted pre-tax profit was set to come in at £300 million this year, Vistry said, also reflecting an £8 million impact from cost value reconciliations across its other regions.
“The significant issues have been found to be confined to the South Division,” a statement read.
“[These] can be attributed to insufficient management capability, non-compliant commercial forecasting processes and poor divisional culture.”
Vistry added in the statement that average weekly sales rates over the year so far were up 42%, but completions for 2024 were expected to sit around 17,500 units, against more than 18,000 previously.
Shares slumped 14.1% on Friday.