11th Jun 2019 09:04
LONDON (Alliance News) - Crest Nicholson Holdings PLC on Tuesday said its new strategy of reducing open market sales and increasing the proportion of pre-funded, presold homes has resulted in increased interim revenue but has hurt margins and profitability.
For the six months to April 30, the housebuilder recorded pretax profit of GBP64.4 million, down 11% from GBP72.0 million in the comparative year ago period. Revenue for the period increased to GBP501.9 million from GBP467.6 million.
Operating profit margin for the first half fell year-on-year to 14.1% from 16.8%.
"The group has made good progress on delivering its revised strategy during this period of heightened political uncertainty," Interim Chief Executive Chris Tinker said.
Tinker became the interim boss of the company after the departure of Patrick Bergin, who stepped down in March. In the same month, Crest Nicholson appointed current Galliford Try PLC Chief Executive Peter Truscott as permanent boss. Truscott will join Crest Nicholson as chief executive once his Galliford Try contract ends in September.
"Our strategy to reduce forward sales risk through an increased proportion of pre-funded, presold homes has also realised a 15% increase in our total forward sales position. We enter the second half of the year with encouraging forward sales, a growing outlet base and an increased proportion of homes for sale at more affordable price points," Tinker added.
Total forward sales at period-end stood at GBP625.2 million, versus GBP544.4 million a year ago.
The company's open-market average selling prices increased by 8% to GBP413,000, largely due to changes in product and location mix. Going forward, the company expects average selling prices to decline, as the proportion of higher-value homes in higher price locations falls and new outlets with lower average selling prices sites open.
"Given the current market, the board remains confident in the prospects for the rest of the year and in achieving earnings in line with consensus," interim boss Tinker said.
Crest Nicholson has maintained its interim payout at 11.2 pence per share.
Shares in the company were trading 1.1% higher at 361.80 pence each on Tuesday morning.
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