Key facts
- Crest Nicholson has reduced its expected home completions for the year to a maximum of 1,400 units.
- The company now forecasts an earnings loss of £10 million, a reversal from prior profit expectations.
- The housing market's subdued performance and competitive pricing from rivals have impacted sales.
- Ongoing negotiations with lenders regarding debt terms are continuing.
- Crest Nicholson is implementing cost controls and targeting the mid-premium housing market.
Crest Nicholson has significantly lowered its financial and building targets, citing a challenging housing market and ongoing discussions with lenders. The company now anticipates building up to 1,400 homes this year, down from a previous forecast of 1,500, and expects to report an earnings loss of £10 million, a stark contrast to its earlier guidance of a £5 million to £10 million profit.
The firm's board informed investors that the housing market has been "more subdued than expected," with increased competition from rivals employing aggressive pricing strategies impacting sales. The broader industry faces headwinds from rising construction costs and higher mortgage rates, exacerbated by geopolitical tensions such as the Iran war. These factors have led many major listed housebuilders to scale back land acquisition and issue profit warnings.
Crest Nicholson has been engaged in extended, emergency talks with its lenders for months, seeking amendments to its debt agreements. The company had previously delayed the publication of its results to facilitate these negotiations, which had not concluded by the time it posted a £35 million loss in July. As of Thursday, these discussions are still ongoing and are projected to extend further.
Chief executive Martyn Clark acknowledged the difficult trading conditions over the summer but stated that the group is making "tangible" progress. Crest Nicholson is implementing stricter cost controls and plans to refocus on the mid-premium segment of the housing market to achieve more stable sales rates. Clark expressed confidence that the company is taking appropriate measures to safeguard liquidity and enhance operational efficiency, positioning the business for a future market recovery.
In the first half of the year, Crest Nicholson managed to reduce its debt by approximately £30 million through the sale of surplus land. The company expects its net debt to be in the range of £70 million to £90 million by the end of the fiscal year.