Crest Nicholson issues profit warning as macro pressures dampen outlook

Crest Nicholson has issued a profit warning due to rising macroeconomic pressures, including global instability, the ongoing conflict in the Middle East, and higher interest rates, which have weighed on its trading outlook.

The FTSE All-Share-listed housebuilder noted that while sales have remained steady in the Midlands, South-West, and Eastern regions, new enquiries and visitor levels have dropped, with the South division underperforming.

Land sales have also slowed, with just one completed so far this year.

As a result, Crest Nicholson has lowered its full-year sales forecast to 1,400-1,500 units, down from 1,550-1,700.

It now expects around £40 million in land sales revenue, revised from £75-£100 million, and anticipates EBIT of £5 million to £15 million due to higher energy and build costs.

Year-end net debt is forecast at £100 million to £120 million.

Due to lower profitability, the group is in talks with lenders to relax financial conditions in order to provide more flexibility to manage finances amid the uncertainty.

The announcement saw its shares drop by a third to 72 pence.

The update comes as the housebuilder continues its restructuring under Project Elevate, with efforts to reposition the business towards the mid-premium market.

This saw it close a divisional office, resulting in around 50 redundancies, and merge its Yorkshire and Midlands divisions.

Chief executive officer Martyn Clark said the company is focusing on cash flow, reducing inventory, and strengthening its balance sheet to navigate the challenges ahead.

“It is increasingly clear that the current macroeconomic uncertainty is contributing to the prospect of a more prolonged higher interest rate environment, renewed cost pressures and a deterioration in consumer confidence,” he said.

“Therefore, in the near-term the right and prudent course of action is to adapt quickly to the challenges presented by the current trading environment and focus on prioritising cash generation and optimising our balance sheet position.

“We are doing what needs to be done to navigate this uncertainty to best position the business to deliver the attractive medium-term opportunity.”

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