Key events
Julia Kollewe
Vistry Group, the house builder formerly known as Boris Homes, expects to build more than 18,000 homes this year, up nearly 12% from last year, as it prepares to work with Keir Starmer’s government to tackle the UK’s housing crisis.
Greg Fitzgerald, the chief executive, said:
We look forward to working with the new government to address the country’s housing crisis and are extremely well placed to support its ambition of delivering the biggest boost to affordable housing in a generation.
Housebuilding shares jumped on news of the landslide Labour victory last Friday, as the party has pledged to tackle planning issues and build 1.5m homes in the next five years.
Vistry expects to make an adjusted profit before tax of £186m in the first six months of the year, up 7%, with completions rising by 8% to 7,750 homes. It sad it had benefited from lower building material costs compared with last year.
Vistry’s share price rose by 0.6%.
The Kent-based company works with local authorities, housing associations and private rental firms to deliver affordable housing. Those partnerships are set to fund 75% of all completions this year. Vistry has seen a pick-up in demand from the private rented sector, while traditional registered providers of social housing are currently focusing on maintenance and remediation of existing housing, particularly in London.
In May, Vistry sold a further 1,750 homes to the private rental company Leaf Living, which was set up in 2021 by Regis and the US fund manager Blackstone. Most of the homes are expected to complete within the next couple of years.
RBC Capital Markets analyst Anthony Codling said:
The election of Labour is good news for Vistry. With its focus on build rates and partnership homes, it is likely to become the teacher’s pet of the Labour government. Working closely with local authorities could provide a win-win, helping councils meet their housing needs, the government its housing targets, and delivering more choice to renters and homebuyers.
Investec’s housing analyst Aynsley Lammin concurred, saying:
The partnerships model continues to underpin a relatively strong performance against a weak private open market … The open market still looks constrained, but with some positive momentum and firm pricing with sales incentives continuing.
London’s benchmark stock index has not followed Tokyo’s lead: the FTSE 100 has dropped 0.1% at the opening bell.
Perhaps London’s lack of chip companies or tech stocks might have something to do with that… although the rest of Europe is no different.
Here are the rest of the opening snaps, via Reuters, from across Europe:
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EUROPE’S STOXX 600 DOWN 0.2%
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GERMANY’S DAX DOWN 0.3%
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FRANCE’S CAC 40 DOWN 0.3%, SPAIN’S IBEX DOWN 0.4%
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EURO STOXX INDEX DOWN 0.3%; EURO ZONE BLUE CHIPS DOWN 0.3%
Thames Water has cash to survive ‘to May 2025’; Japan’s Nikkei rises 2% to new record
Good morning, and welcome to our live, rolling coverage of business, economics and financial markets.
Thames Water has said that it has enough cash to keep it going until May 2025, as potential investors await the outcome of negotiation with the UK regulator.
The company, which provides water to London and the Thames Valley in the south-east of England, is in a parlous financial state. Keir Starmer, the new prime minister, and Rachel Reeves, the new chancellor, have been briefed that the company presents a “critical risk” to the country.
Thames Water Utilities Limited, the regulated subsidiary, on Tuesday said it had £1.8bn in cash and other liquid assets “sufficient to fund our operations for the next 11 months to the end of May 2025”.
Following the draft determination and our response to Ofwat we will be engaging with potential investors and creditors to seek new equity and to extend our liquidity runway. Any equity process is not expected to conclude until after the final determination.
The company reported a 10% increase in revenues to £2.4bn in the year to 31 March as it raised bills in line with inflation, and scraped to a profit of £75m. It also said that it spent a record £2.1bn as it maintained and upgraded its ageing pipe network.
Chris Weston, chief executive of Thames Water since December, said he believed the business could be turned around. He said:
The challenges we face are well documented, but our operational and financial performance for the last year show good progress, and these positive results provide the right foundations on which to build and improve.
Japan’s Nikkei index hits new record
Japan’s benchmark Nikkei 225 index closed at a new record high on Tuesday, the latest in a series of records amid a global surge in investor interest in artificial intelligence companies.
Computer chip semiconductor companies – who have been some of the biggest beneficiaries of the rally – helped the index to a 2% gain on Tuesday, outpacing other Asian stock indices.
The index closed at a record high of 41,580.17 on Tuesday, after rising as high as 41,769.35 during afternoon trading.
The Nikkei had taken decades to surpass its previous peak, hit during the 1989 bubble. On the final trading day of 1989, it had closed at 38,915.87; that level was reached again in February, 34 years later.