Shares in Watkin Jones PLC (AIM:WJG) plunged 28% today after it warned that full-year 2022 operating profits would be around 10% below current market expectations reflecting the deferral of revenue from two forward sales from this year into the next financial year.
The property group also said it was now seeing some pricing and margin softness on sales concluded in the second half, with purchasers facing increased funding costs, and that it expects these margin pressures to continue into 2023.
The company said the deferred sales had been impacted by recent market volatility although the operational performance in the second half remained strong.
The group continues to benefit from a strong balance sheet with gross and net cash, as at 30 September 2022, of approximately £105mln and £75mln respectively, it said.
Looking ahead, Watkin Jones said despite “uncertainty around macroeconomic conditions in the short term, the group retains very good visibility over its development pipeline, has low levels of asset exposure and strong liquidity”.
“We have good revenue visibility coming into the next financial year with c.£270mln of revenue secured, and expect demand from institutions for residential for rent assets to remain robust.”
But it cautioned that margin pressure as a result of purchasers' elevated borrowing costs will continue into full year 2023.