15th Jan 2024 12:29
(Alliance News) - Crest Nicholson Holdings PLC shareholders were disappointed on Monday, after the housebuilder issued another profit warning for financial 2023.
Shares in Crest fell 4.3% to 207.40 pence each in London on Monday around midday. Over the past 12 months, the stock is down 22%.
The Surrey, England-based housebuilder said it now expects adjusted pretax profit to be around GBP41 million for the year ended October 31. This would constitute a 71% decline from the GBP137.8 million achieved in the prior year.
"While there may have been a break in the clouds looming over the housebuilding sector the latest update from Crest Nicholson shows life remains tough, said AJ Bell analyst Russ Mould.
Back in November, Crest had guided for a range of GBP45.0 and GBP50.0 million, which was cut from its prior guidance for GBP50.0 million.
Crest explained that this stemmed from a "comprehensive" review of costs associated with the Brightwells Yard, Farnham contract, as well as other legacy assets, which identified further additional costs. In November, it had recorded an incremental cost movement of around GBP11 million in its second half for Brightwells Yard.
Additionally, Crest now expects an exceptional charge of GBP13 million relating to a legal claim that pertains to a low rise apartment scheme it had built, which was damaged by fire in 2021. The charge is not cash in financial 2023, it said.
"The group is addressing this claim diligently and efficiently and will provide further details in our preliminary results. This is unrelated to the general fire remediation programme that the group is currently delivering," Crest added.
Analysts at Jefferies said "until greater clarity of the total costs of these issues are understood, the stock is likely to remain at a discount to peers".
More positively, it acknowledged the "more constructive backdrop" for house buyers and the wider housing market stemming from the recent reduction in mortgage rates.
Crest added: "Although it is too early to gauge customer behaviour, we have been encouraged by an increase in customer interest levels and inquiries this calendar year."
AJ Bell's Mould said its "more encouraging" outlook helped to salve the pain for shareholders.
"The company is seeing some encouraging signs in terms of enquiries but that is yet to translate to customer behaviour and the property market remains a fragile beast. There is hope, but as yet no guarantee, that the coming months will bring further reductions in mortgage costs as the Bank of England cuts rates," said Mould.
The Bank of England will announce its latest interest rate decision on February 1.
UK house prices increased at the start of the year, according to property portal Rightmove.
Across Britain, the average price of a property coming on the market increased by 1.3% or GBP4,571 month-on-month, to GBP359,748, Rightmove said.
The number of potential buyers contacting estate agents about homes for sale in the first week of 2024 was 5% higher than in the same period last year, with the growth in activity strongest in London and the North East of England, Rightmove said.
It added that the number of sales being agreed as January gets under way has been higher than the start of last year.
Tim Bannister, Rightmove's director of property science, said: "After a stop-start market in 2023, the initial signs suggest a smoother year for movers in 2024.
"More new sellers are now entering the market, and with more confident pricing," he added.
Crest Nicholson releases its annual results next week Tuesday.
By Sophie Rose, Alliance News senior reporter
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