Watkin Jones shares fall 30% after group cuts profit forecasts

Watkin Jones, a student housing and rental development group, warned it had suffered a “slower than expected” summer market.

The company lowered its annual profit forecast and said “uncertainty” over the pace of interest rate cuts will weigh on its full-year results.

In response, Peel Hunt’s brokers downgraded their rating of Peel Hunt, which contributed to its shares falling sharply.

Watkin Jones’s actions fell 29.08 percent or 14.80 pence to 36.10 pence on Wednesday morning.

The Aim-listed firm said it was “unlikely” to complete any further deals before the end of its current reporting period at the end of September.

Watkin Jones has cut its full-year profit forecast to between £10m and £12m, while gross cash is now expected to be £80m and net cash around £65m, beating forecasts.

It said: ‘While the absence of additional funding before year-end will result in a lower performance than previously anticipated, the Group is expected to show material improvement in FY24, with adjusted operating profit currently expected to be in the range of £10m to £12m (FY23: £0.2m).’

In 2023, the group recorded an annual profit of £0.2 million and had gross cash of £67 million.

Analysts at Peel Hunt cut full-year pre-tax profit expectations by 42 per cent to £7.5m from £13m for 2024, but noted that Watkin Jones’s net cash “is in better shape than expected”.

They added: “We assume a slow recovery in activity, but a faster decline in interest rates would be a catalyst for increased activity.”