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UK housebuilder Vistry upbeat on margins as demand grows

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(Reuters) -British housebuilder Vistry Group Plc forecast gross margins to rise significantly in fiscal 2022 on Friday, with adjusted profit to be at the top end of market expectations, riding on strong demand across its businesses.

UK housebuilders have underscored robust demand in an undersupplied market, although house prices have slackened in recent months amid fears of a broader economic slowdown due to rising inflation and a tightening cost-of-living squeeze.

The Kings Hill, UK-based company, one of the largest private sector affordable housing providers in the UK, said forward sales of mixed-tenure units in its Housebuilding and Partnerships divisions grew 16% to 2.14 billion pounds ($2.57 billion) as at June 30.

The company said it now expected annual adjusted gross margin to be ahead of its 23% target, adding that the 5%-8% price hike for its private units in the first half of the year comfortably offset cost pressures.

The FTSE 250 firm, however, said that planning remained "the single most significant constraint on the business" and also flagged annual cost inflation in the region of 6% amid rising energy prices and increasing wages.

On Thursday, Britain's second-biggest homebuilder Persimmon warned it would build fewer homes this year as it grapples with shortages of material, labour and delays in planning.

($1 = 0.8330 pounds)

(Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Sherry Jacob-Phillips and Rashmi Aich)

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