BUSINESS LIVE: Vistry plots restructuring; Foxconn faces China probe; Keller eyes record year

Managing director for equity research at RBC Capital Markets Anthony Codling:

‘Vistry’s trading update is bittersweet, the open market housing market remains tough, and it didn’t see the usual autumn/ back to school pick up in sales.

‘It is therefore having to try harder to sell homes. However, Vistry’s focus is now its partnership business and here underlying demand is robust although profit margins are lower, a classic case of swings and roundabouts.’

FTSE 250 geotechnical engineering company Keller Group expects a record 2023 after an ‘exceptionally strong first half’.

The group now expects full-year operating profits to be materially ahead of market expectations, despite weaker than expected demand in Europe.

Michael Speakman, CEO of Keller Group, said:

‘The Keller team has built on an exceptionally strong first half to deliver a better than expected third-quarter performance, and consequently we now expect full year underlying profit to be materially ahead of current market expectations.

‘This performance reflects continued momentum and operational improvements within the business and the outstanding contribution of colleagues across the Group, whom I would like to thank for their dedication and hard work.’

America’s tech giants are this week set to defy global market gloom as they kick off what is expected to be a bumper earnings season generating a £62billion profit haul.

Revenues generated by the giant firms – Meta, Amazon, Microsoft, Alphabet and Apple – are forecast to total £324billion.

It comes as wider markets are wracked by fears over the conflict in the Middle East, and interest rates.

IPhone maker Foxconn faces a tax investigation by Chinese authorities, amid speculation the probe may have political motives ahead of the upcoming Taiwan elections.

China’s state-backed Global Times tabloid reported on Sunday that some of Foxconn’s key subsidiaries in China were the subject of tax audits and that China’s natural resources department had conducted on-site investigations on land use by Foxconn enterprises in Henan and Hubei provinces and elsewhere.

Foxconn, formally called Hon Hai Precision Industry Co Ltd, employs hundreds of thousands of people in China and is a major investor there, regularly hailed by Beijing as an example of the success of Taiwanese investors in the country.

The group said on Monday morning: ‘Legal compliance everywhere we operate around the world is a fundamental principle of Hon Hai Technology Group (Foxconn). We will actively cooperate with the relevant units on the related work and operations.’

British Steel is reportedly preparing to slash up to 2,000 jobs amid an operational shake-up.

Jingye, its Chinese owner, has sounded out consultants to oversee a cost-cutting programme, according to the Sunday Times.

However, no decisions have been taken about job losses, sources told the newspaper.

Vistry has slashed profit targets as the homebuilding group plots a restructuring that could cost as many as 200 jobs, in further evidence of pressure on Britain’s housing sector.

The company now expects adjusted pre-tax profit for 2023 to come in at £410million, including the impact of a reduction in full-year site margins, compared with the over £450million it was targeting.

Vistry said: ‘In September, the Group announced its updated strategy to fully focus its operations on its high growth Partnerships model, increasing its delivery of much needed affordable mixed tenure housing across the country.

‘The implementation is making good progress with the revised operating structure and senior appointments confirmed, and the employee consultation process concluded. The Group will operate as a single business with 27 regional business units, a reduction from 32, and the Group’s overall headcount will reduce by c. 200 as a result of this restructuring.

‘The Group has the capacity within this infrastructure to deliver upon its medium-term growth targets, with greater use of standardisation and timber frame manufacturing.

‘The Group expects to deliver c. £25m of annualised cost savings from this integration of Partnerships and Housebuilding, in addition to the £60m of synergies from the Countryside acquisition.’