Watkin Jones expects profit wipeout

Watkin Jones has reduced its profit expectations and now only expects to break even for the year ending 30 September 2023.

The build-to-rent specialist warned in a trading update that new cost pressures meant it would no longer achieve the expected pre-tax profit of £2m reported in its last profit notice in July.

“Since the [July] trading update, the group has incurred certain additional costs, including acceleration costs to ensure successful completion on two schemes,” it noted.

It added: “The group was successful in achieving its operational objectives for the second half of the year, with practical completion on four schemes in the final quarter and the sale of its three non-core PRS [private rented sector] operational assets.”

The firm expects to report around £400m in revenue for the financial year. In the latest update, it reported £43m in current net cash, including £9m raised from asset sales. It also expects to have saved more than £2m as a result of cost reviews made since the July trading update.

The latest update also predicted pre-tax profit of £15m to £20m in the 2024 financial year, despite ongoing “challenging market conditions”.

It added that it did not expect to incur additional costs for remediating legacy properties, after announcing it would be spending an extra £30m in July.

Chief executive Richard Simpson stepped down immediately after the July profit warning, with Alex Pease stepping in as interim head.

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