Crest Nicholson suffers half-year earnings slump

Housebuilder Crest Nicholson has posted a steep decline in pretax profit during the first half, adding that momentum has “softened slightly” since Easter on the back of mortgage rate volatility. Adjusted pretax profit plunged by 87.6% to £2.6m in the six months ending 30 April, while revenue fell by 8.9% to £257.5m. The housebuilder logged a statutory loss before tax of £30.9m, plummeting from £28.4m profit in the same period in 2023. Home completions were down by 11.9% to 788. Sales per outlet per week were at 0.47, compared with 0.54 year-on-year. The housebuilder said although the spring selling season “started well” against an improving macro backdrop, trading had weakened amid mortgage rate movements and predictions that the base rate reduction will come later in the year than previously expected. The upcoming general election has additionally created “some short-term uncertainty”. Adjusted operating profit stood at £6.2m, which the housebuilder said was driven by a higher proportion of revenue from low margin sites and a “pre-exceptional” £5.9m charge from completed sites. The group said it expected the majority of its low-margin sites to be traded during FY25. Crest Nicholson said it carried out a review of completed site costs, supported by an external consultant, resulting in a one-off charge of £31.4m. Nearly £26m of that sum was treated as an exceptional item, as it related to developments no longer part of the core strategy and were started prior to 2019. Outgoing chief executive Peter Truscott, who will be replaced in the role by Martyn Clark this week, said the housebuilder made some “important operational progress” in the first half of the year, and that it has “a clear and comprehensive plan to resolve the legacy and operational issues”. “The group is continuing to focus on completing its low margin sites, with FY23 and FY24 being the peak years of impact and the majority of the remainder expected to be traded through during FY25,” he said. “Going forward, the group will benefit from its high-quality, higher-margin land portfolio, and with an increased commitment to operational efficiency and control, is well-positioned to capture growth opportunities as market conditions improve.”