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Crest Nicholson expects operating loss as home completions fall
The housebuilder now forecasts about 1,350 to 1,400 completions for the year to Oct. 31, down from a prior 1,400 to 1,500 estimate.
Crest Nicholson warned in an unscheduled trading update that it expects to slide into the red in the year to Oct. 31, citing a more subdued property market. The company now expects to complete between 1,350 and 1,400 homes, below its previous estimate of 1,400 to 1,500.
The housebuilder said conditions were more subdued than expected over the summer and that its sales rate slowed over the past six weeks compared with the first half of the year, with affordability constraints and competitive pricing weighing on demand. Crest also said building material prices remain about 3% to 4% higher on average.
Crest Nicholson now expects an operating loss of about £10m, reversing an earlier forecast of a profit of between £5m and £10m. It is also the third profit warning since April, and the shares plunged more than 10% on Thursday morning.
The firm cited steps it is taking to manage pressure, including reducing borrowings faster than expected and expecting net debt of £70m to £90m at the end of October, down from £100m to £120m previously. It said talks to renegotiate banking covenants with lenders have been constructive but could involve some slippage in its timetable, and it referenced uncertainty around the property market linked to the US-Israel war involving Iran.