Crest hopes hit a ceiling
CREST NICHOLSON rocked the housebuilding sector by scaling back ambitions after a slowdown in sales in London and the Home Counties which could dent annual profits by about £30million.
Shares in the FTSE 250 company dropped 26½p to a five-year low 296½p after its third cut to forecasts in two years.
It blamed Brexit and economic uncertainty for delays to customers’ decisions to splash out on more expensive homes.
Bigger rivals Berkeley Group and Persimmon fell 92p to 3308p and 61p to 2198p.
Crest’s new strategy, led by chairman Stephen Stone, will prioritise cashflow and dividend payouts over building rates and spending on land.
Finance chief Robert Allen is stepping down after less than two years.
Stone said: “The usual autumn pick-up in sales volumes has not been evident during September and October, with many customers putting off decisions to buy while current political and economic uncertainties persist. In a number of locations and at higher price points, sales have remained subdued.
“Reservation levels at our London sites have slowed significantly and we have experienced some downward pressure on pricing in areas where affordability is most stretched.”
Crest expects the impact of falling sales and a squeeze on margins from customer incentives to reduce annual pretax profits to £170-190million, compared with forecasts of just over £200million.
Analysts said 7 per cent of revenue was expected to come from selling homes at or above £1million and a further 21 per cent at prices between £600,000 and £1million.
Barratt Developments lifted some of the gloom as the biggest housebuilder told investors it had made a “strong start” to the financial year, with forward sales up 12.4 per cent on last year since the start of July.