Crest Nicholson blames profit wobble on offsite focus

Grant Prior 6 months ago
Share

Crest Nicholson said focusing too heavily on enhancing off-site manufacturing (OSM) has seen it lose ground to competitors in other areas of house building.

The admission came as the housing giant unveiled a disappointing set of results which have prompted a company-wide strategy review under new chief executive Peter Truscott.

Adjusted pre-tax profits were down to £121.m for the year to October 31 2019 from £168.7m last time as sales dipped to £1,095m from £1,122m.

The new strategy will look to improve operational efficiency on site and introduce group-wide construction specifications to slash material buying costs.

Truscott said: “Historically, we have defined operational efficiency in terms of building an off-site manufacturing capability.

“OSM will remain an important development for our sector and we will continue to assess its relevance for our delivery model.

“However, our operational efficiency opportunity is much wider than just OSM and this historically narrow view reflects where we have lost pace with our competitors and their ways of working.

“Currently, we are inconsistent with many aspects of our operations, often doing things differently from site to site and from one division to another.

“This has led to higher build costs than necessary, inconsistent quality and delivery, excessive overheads and selling costs, and inefficient use of working capital.

“Significant benefits will be derived from the adoption of our new house type range which is currently being rolled out across the Group.

“It comprises 24 core house types and builds. It is designed to be plotted effectively with common depths enabling efficient roof construction and the ability for accommodation to be arranged over two, two and a half, and three floors.

“We will target 80% of our production coming from this new range over time.

“Our build costs will benefit from the introduction of the new house type range and we also anticipate significant savings being derived from a standard group specification.

“Previously, we specified our product too widely across divisions and our supply chain, leading to excessive costs and insufficient buying power.”

Latest news

Winners revealed for £600m Cadent gas deal

Quartet land ten-year programme of infrastructure work
51 mins ago

Balfour Beatty to start £250m Lewisham Gateway phase 2

Forward funding deal with rental specialist Get Living paves way for construction start
32 mins ago

Construction starts climb-back after cliff-edge output fall

Monthly output still 39% or £5.2bn down on pre-Covid level
1 hour ago

B&K in ‘strong position’ after revenue tops £1bn

Bowmer & Kirkland boasts year-end net cash of £447m after profits hit £73m
2 hours ago

Contractors press Government for Sizewell C green light

£300m of early works could begin this year if Government seizes £18bn nuclear build opportunity
2 hours ago

Mace Dragados kicks-off £1.3bn HS2 Euston station build

£400m worth of subcontract packages to be let over two years
19 hours ago

Firms wanted to clear social housing repairs backlog

PfH seeks firms for £490m repairs and voids DPS deal
3 hours ago

Construction work accelerated on £170m of flood defence schemes

Work to start on 22 sites in the next two years
3 hours ago

Final London Super Sewer TBM arrives by barge

Final stretch in sight as TBM Selina prepared for deepest Thames Tideway drive
21 hours ago

Multiplex lands £140m Glasgow office job

Main construction work to start on 13-storey scheme
22 hours ago

DfE readies firms for ‘new deal’ schools building push

Over 30 firms in fight for places as existing £8bn framework comes up for renewal
1 day ago

Student rooms developer gears up to build again

Unite buys Edinburgh site for 300-bed scheme after Covid-work pause
1 day ago

Farringdon office scheme to restart after £140m funding deal

Confidence boost for London market as main contractor due to be appointed shortly
1 day ago

HS2 team unearths Iron Age murder victim

Large wood-henge structure uncovered during Buckinghamshire tunnel site excavations
1 day ago

Hotel and office block plan for Manchester Mayfield scheme

Work to start early next summer on 385,000 sq ft project
1 day ago

South London’s Purley tower approved

Developer Thornsett Group get thumbs up for 17-storey tower mixed-use scheme
1 day ago

Collapsed crane was erected day before tragedy

Wolffkran worker still seriously injured in hospital after 85-year-old woman killed
5 days ago

London council calls up firms for £6.8bn works deal

Tower Hamlets 10-year dynamic purchasing deal will cover new housing, schools and regeneration schemes
4 days ago

Arup to cut 350 UK jobs

Job cuts among 6,000 strong UK workforce to hit next month
5 days ago

Green light for £230m Sky Studios Elstree

BAM, Lendlease and VolkerFitzpatrick understood to be in running for main contract
5 days ago

M&E contractor Ilec goes into administration

Specialist goes down after sharp drop in turnover
4 days ago

Morgan Sindall starts up Salford resi tower project

Work on 23-storey apartment block reignites New Bailey scheme
4 days ago

Amey appoints former Murphy boss as transport chief

Peter Anderson to head-up Transport Infrastructure business
5 days ago

Woman killed in London crane collapse

Four others injured as jib crashes through roof of houses next to modular building site
6 days ago

Bellway asks subcontractors for 5% rate cut

House builder wants suppliers to drop prices from next month
5 days ago

Esh Group unveils 8% staff cut

Nearly 70 jobs to be cut from 840-strong workforce
5 days ago

Bouygues wins £250m London hospital expansion

Evelina London children’s hospital embarks on next phase of development plans
6 days ago

House builders returning to full productivity on site

Vistry reports falling supply chain prices while Persimmon says forward sales up 15%
5 days ago

Firms to get £1,000 for every worker brought off furlough

Plan for jobs promises £6,500 for work placement kickstarters and £2,000 for apprentices
6 days ago

£3bn green boost as construction leads Covid recovery

Investment for energy efficient retrofitting and stamp duty holiday to boost housing market
6 days ago

Contractor services