20th Nov 2024 10:55
(Alliance News) - Crest Nicholson Holdings PLC on Wednesday said it expects to report profit at the lower end of its guidance range due to a higher proportion of affordable home sales.
In a trading update, the Surrey, England-based housebuilder said it estimates that adjusted pretax profit in the financial year that ended October 31 was at the lower end of its prior guidance of GBP22 million to GBP29 million. This will be down from financial 2023, when adjusted pretax profit was GBP41.4 million. This in turn was down from GBP137.8 million in 2022.
Crest said profit was down due to a higher proportion of affordable homes sold and as it continues to trade out of low margin sites.
The company said 45% of its 1,873 sales in the financial year were affordable and private rented sector units. This is up from 26% of its 2,020 completions in 2023.
Shares in Crest Nicholson were down 1.8% to 150.47 pence in London on Wednesday morning. Investment bank Jefferies cut its price target on Crest shares to 175p from 200p, retaining a 'hold' rating.
Crest said its sales rate in the recent year was down to 0.48 per outlet per week from 0.52 last year, though it noted the rate improved to 0.53 in the last ten weeks of the financial year.
The company said improvements in cash management delivered "better than expected" year-end net debt at GBP8.5 million.
Chief Executive Officer Martyn Clark said: "FY24 has presented challenges due to both internal and external factors, with private open market sales volumes continuing to be impacted by ongoing affordability concerns.
"FY25 will be a year of transition for Crest Nicholson. We are well-positioned with sufficient land with full planning permission to support our planned outlets and volumes. We will focus more on private sales and prioritise value over volume to enhance returns and margins."
He added that the "broader economic landscape is becoming more favourable" noting a "more benign" interest rate environment and increased government support to improve the planning process.
Crest Nicholson full annual results will be released on January 21.
By Michael Hennessey, Alliance News reporter
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