16th May 2018 08:49
LONDON (Alliance News) - Shares dropped in Crest Nicholson Holdings PLC on Wednesday as it said it expects operating margins for its current financial year to be at the bottom end of its guided range.
Shares in the FTSE 250-listed housebuilder fell 13% at 432.80 pence early Wednesday morning.
Crest Nicholson said that the experiences of flat pricing against a backdrop of build-cost inflation in the range of 3 to 4% will mean that operating margins for the full year are expected to be at 18%, at the bottom of the group's guided range of 18% to 20%.
In addition, Crest Nicholson said that although most of its sales outlets have performed well, sales at higher price points have been more difficult to achieve, reflecting the greater interdependency of higher-value sales with transactions in the second-hand market, where there is more subdued activity.
As a result, margins for the next financial year are expected to be at a similar level to the current year.
Despite this, forward sales for the year-to-date are 11% ahead of the same period the year before, leading to expectations of 15% growth in revenue for the year ending October 31.
For the six months to the end of April, forward sales were GBP441.7 million, up 6.3% from GBP415.6 million, with 1,251 unit completions.
"The group has delivered a good sales performance in the first half of the year. The business continues to increase the number of homes built and carries positive momentum into the second half of 2018, with steady outlet growth and higher forward sales," said Chief Executive Patrick Bergin.
"Flat pricing has had a negative impact on margins, but volumes in the new build housing market continue to be robust and Crest Nicholson remains well positioned to grow volumes and deliver the homes that the UK needs, while continuing to focus on delivering strong returns for shareholders," Bergin added.
Crest Nicholson Holdings will publish its interim results on June 12.
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