13th Jun 2024 12:52
(Alliance News) - Analysts prepared to slash profit forecasts for Crest Nicholson Holdings PLC after it highlighted a softening in trading and higher remediation costs alongside interim results.
The Surrey, England-based housebuilder reported a GBP30.9 million pretax loss for the six months to April 30, swung from a GBP28.4 million profit a year before. Its basic loss per share was 9.1 pence, compared with 8.2p.
On an adjusted basis, pretax profit still plummeted 88% to GBP2.6 million from GBP20.9 million. Basic EPS fell 89% to 0.7p from 6.1p.
Revenue decreased 8.9% to GBP257.5 million from GBP282.7 million, as home completions decreased 12% to 788 from 894.
Shares in Crest Nicholson were trading 10% lower at 215.81 pence each in London on Thursday afternoon.
Crest Nicholson said the spring selling season started well but that momentum has softened since.
"Momentum has softened slightly since Easter, reflecting the volatility in mortgage rates and the expectation of a base rate reduction coming later in the year than previously expected. The imminent general election is creating some short-term uncertainty, but this is anticipated to be alleviated in July once the outcome is known," the company said.
As a result, financial 2024 adjusted pretax profit is forecast to be between GBP22 million to GBP29 million.
Crest said remediation costs have risen to GBP31.4 million as its review of completed sites concludes.
Peel Hunt pointed out the increase in remediation costs to more than GBP31 million from the original GBP15 million reflects the expanded scope of the review, which now includes all completed sites in the Regeneration and London division.
This, together with the softening trading picture, has led to adjusted pretax profit guidance being reduced to GBP22 to GBP29 million, well below the current consensus of around GBP40 million, the broker said.
Peel Hunt noted around GBP6 million of the reduction is related to the remediation costs, with the remainder being a reflection of the group’s focus on clearing its inventory of low margin sites.
AJ Bell Investment Director Russ Mould noted: "The housebuilding sector was supposed to be on the path to recovery but Crest Nicholson’s latest results are at odds with that narrative."
"The company says since Easter it has seen a softening of the momentum which had built up at the start of the year. The company and the wider sector will hope this relates more to short-term uncertainty around the election than the fact interest rates look set to stick at a higher level for longer than hoped," he added.
By Jeremy Cutler, Alliance News reporter
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