Crest Nicholson sounds profit warning

Grant Prior 10 months ago
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Crest Nicholson issued a profit warning today as it was hit by disappointing sales in London and the south of England.

The housebuilder said it would slow down construction rates and spending on new land to “align with current market conditions.”

It will also be ramping-up the use of off-site methods of construction in a bid to cut costs.

Crest Nicholson has now closed its London division with all sites in the capital now managed by offices in the Home Counties.

The new strategy is focused on “shareholder returns by prioritising cashflow and dividends.”

Pre-tax profits for the year to October 31 2018 are now expected to be in the range of £170m to £190m with margins lower than previous guidance of 18%.

Stephen Stone, Executive Chairman, said: “The usual Autumn pick up in sales volumes has not been evident during September and October, with many customers putting off decisions to buy whilst current political and economic uncertainties persist.

“Mindful of the current uncertain market environment, our new strategy will focus on shareolder returns by prioritising cash flow and dividends, maximising the value in our portfolio, and improving operational efficiency.”

The company added: “Reservation levels at our London sites have slowed significantly and we have experienced some downward pressure on pricing in areas where affordability is most stretched.

“Furthermore, sales at higher price points have suffered from reduced transaction levels in the second-hand market, resulting in lengthy property chains which take longer to assemble and are more vulnerable to failing to complete.”

Crest Nicholson has compensated by accelerating bulk sales to Registered Providers and PRS investors.

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