Crest Nicholson pulls back from London market

Aaron Morby 5 months ago
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Crest Nicholson has reported growing building cost pressure in the first half of the year and revealed it plans to close its central London office as the market in the capital weakens.

The firm said it would re-shape its divisional structure, by closing the Central London office in November and re-opening a south east division, based in Kent.

Each of its four regional businesses around London will look at outer-London opportunities as they arise, while also having a portfolio of sites across their wider geography.

Crest Nicholson said the move would allow it to continue to serve the London market where suitable opportunities arose, but provide the flexibility to reduce reliance on London volumes where conditions or returns were not attractive.

Patrick Bergin, chief executive, said: “Our experience of generally flat pricing against a back-drop of continuing build cost inflation has, however, had an adverse impact on our margins and we have taken a number of actions to seek to offset build cost pressures and invest in areas of greater housing affordability.”

In the first half operating margins fell from 19.1% last half year to 17.2%, hit by generally flat pricing against a backdrop of continuing build cost inflation at 3-4%.

“Our robust business model, focused on delivering well-designed product across the Southern half of the UK, ensures the business is well positioned to thrive against a backdrop of continuing strong demand for housing.”

To further streamline business operations, Crest said aimed to tighten performance from a broader focus on cost and procurement, introduction of elements of off-site manufacturing and it new core housing range.

Overall revenue edged up 13% to £474m while pre-tax profit slid 2% to £75m,  impacted by higher financing costs due to investment in new sites and the timing of joint venture performance.

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