Key facts
- Crest Nicholson has lowered its housebuilding target to 1,350-1,400 units for the year ending October 31.
- The company now anticipates an operating loss of approximately £10 million, a reversal from previous profit guidance.
- Subdued market conditions, affordability constraints, and competitive pricing have impacted sales.
- Negotiations with lenders regarding banking covenants are ongoing and expected to take longer than anticipated.
- Crest Nicholson has implemented cost controls, including job cuts and office closures.
British housebuilder Crest Nicholson has issued a profit warning, anticipating an operating loss of approximately £10 million for the year ending October 31, a significant reversal from its earlier forecast of a £5 million to £10 million profit. The company cited a 'subdued' property market during the summer, characterized by affordability constraints and competitive pricing, which has slowed its sales rate.
Crest Nicholson now expects to complete between 1,350 and 1,400 homes, down from its previous estimate of 1,400 to 1,500. This marks the third profit warning since April. Building material prices remain elevated, and the company has implemented cost-saving measures, including closing a divisional office and cutting 50 jobs.
The company reported a pre-tax loss of £35.2 million for the six months to the end of April. However, it is reducing borrowings faster than anticipated, with expected net debt at year-end now projected to be between £70 million and £90 million, down from £100 million to £120 million.
Crest Nicholson has been in ongoing negotiations with lenders to renegotiate banking covenants, describing the talks as constructive but anticipating delays. Chief executive Martyn Clark acknowledged the difficult trading conditions but highlighted progress in actions within the company's control, focusing on protecting liquidity and improving operational execution. The company aims to reposition itself in the mid-premium housing market.