Crest Nicholson’s profit nearly halves as sales fall

Crest Nicholson has reported a 46% drop in pre-tax profit as inflation and a ‘benign’ sales market hit its margins.

The housebuilder, in its unaudited results for the six months to 30 April, reported pre-tax profit for the half year of £28.4m, down from £52.5m for same period the previous year. Its revenue fell 22% over the same period to £282.7m, which it said reflected the “economic uncertainty and lower confidence in the housing market.”

The firm said high inflation had affected its construction costs. It said: “In previous years housebuilders have been able to offset this impact through higher selling prices in an environment of strong demand.

“However, in a more benign sales environment this has not been possible and has consequently impacted our margin performance in the first half. Overall build cost inflation has remained at high single digit percentages throughout the period.”

Its sales per outlet week fell from 0.72 to 0.54 year-on-year, while overall completions dropped from 1,096 to 894. Its forward sales also dropped from 2,891 to 2354 units.

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The firm said however its adjusted profit before tax for the year is expected to be in line with previous consensus estimates of £73.7m. This would be a steep drop on the £137.8m adjusted profit before tax recorded in 2022.

Crest Nicholson said its ‘disciplined approach’ to land buying has seen it add “several high quality sites in desirable locations”. It has added 1,539 plots to its short-term land portfolio.

On building safety, it said it is working to remediate 90 buildings in various stages of design, procurement and is seeking to recover £11.1m from third parties due to defective design and workmanship.

Peter Truscott, chief executive of Crest Nicholson said: “As we traded through the period, confidence started to return and this has been reflected in our trading metrics, which have sequentially improved throughout the period. Unemployment remains low and mortgage availability remains good albeit at more expensive rates.

“The ongoing lack of housing supply is continuing to support house prices and these factors are also driving strong levels of rental inflation. The economic case for buying a home therefore remains compelling, but for many first time buyers the higher cost of borrowing and the cessation of Help to Buy are prohibitive to realising this ambition.”