Challenging Outlook for Watkin Jones

Shares of Watkin Jones experienced a substantial decline on Wednesday as the property developer acknowledged the difficulty in improving its underlying profit before interest and taxes in the second half of the year amidst challenging market conditions. This trend is expected to persist until fiscal 2024.

At 0710 GMT, shares plummeted by 35%, or 27.0 pence, to 50.2 pence.

Watkin Jones expressed concerns about the completion of transactions for its forward sales, particularly in relation to its Bristol student accommodation project and five other projects. There is a heightened risk that these sales may not be finalized by year-end.

If no new forward sales are realized before the end of the fiscal year on September 30, combined with an anticipated impairment charge of approximately £10 million ($13 million) resulting from the reassessment of some non-core assets earmarked for sale, the group does not expect its underlying profit before interest and taxes to surpass the £2 million recorded in the first half of this year.

Looking ahead to fiscal 2024, Watkin Jones forecasts its profit before interest and taxes to range between £15 million and £20 million.

Additionally, the company intends to allocate an additional £30 million to £35 million over the next five years for exceptional provision for remedial works on legacy properties.

As of June 30, Watkin Jones reported a net cash position of £36 million.