UK developer Watkin Jones has cut its adjusted operating profit forecast for the financial year of 2024 (FY24), as reported in its latest trading update.
The company now expects its adjusted operating profit to be between £10m ($13.04m) and £12m, down from its previous forecast of at least £15m.
This projection comes due to slower market activity during the mid-year period and is attributed to uncertainties surrounding interest rate cuts.
Although the market's slower recovery is said to have led to performance below initial expectations, Watkin Jones has reported progress in its operational objectives.
The company's new Refresh initiative has completed its first project and is witnessing a growing pipeline of opportunities.
Additionally, the company’s in-build schemes are progressing, with two practical completions anticipated within this financial year.
Watkin Jones anticipates its gross cash to be £80m and net cash around £65m on 30 September 2024.
The company has also maintained its stance on the exceptional provision for remedial works on legacy properties, indicating no change in its position.
However, the slower pace of recovery is expected to influence the company's 2025 results.
Watkin Jones has adjusted its expectations, predicting that the adjusted operating profit for 2025 may not exceed the guidance for 2024 and will depend on forward liquidity trends.
The company acknowledges that while year-on-year progress in 2025 is possible, it hinges on market conditions improving more rapidly in the upcoming financial year.
Watkin Jones stated in a filing: “We continue to actively review opportunities to expand our longer-term pipeline and are seeing an increasing number of attractive potential opportunities in the land market and through alternative transaction structures, which will be important in driving profitability in FY26 and FY27.
“While the group's robust net cash position provides it with a strong financial underpin for its committed spending requirements, it is nevertheless a limiting factor on the extent to which we can take advantage of market conditions and further develop our pipeline.”
Last month, Watkin Jones secured a finance agreement for a new 397-bed purpose-built student accommodation project in Stratford, London, UK.
