Crest Nicholson cautions over ‘difficult’ start to 2019 as profits tumble 15%
Housebuilder Crest Nicholson has revealed annual profits dived 15% after Brexit worries hit the London market, and warned over a “difficult” start to 2019.
The group posted pre-tax profits of £176.4 million for the year to October 31, down from £207 million a year earlier.
It blamed Brexit uncertainties for putting off buyers and “breeding unease”, compounding an already sluggish London market.
Crest also cautioned customer demand was unlikely to bounce back until Brexit has been resolved.
Boss Patrick Bergin said: “We have faced some challenges in London and with sales at higher price points where political and economic uncertainty has adversely impacted customer demand, and this is likely to continue pending Brexit resolution.”
He added: “In the context of an unresolved Brexit, I expect the first half of 2019 to be difficult.”
Crest had already warned over profits in October after trading in the traditionally-strong autumn selling season had been subdued.
It announced that executive chairman Stephen Stone was leading a new strategy, supported by Mr Bergin, which aims to stem the decline in profits.
As part of its overhaul, Crest is looking to cut costs and has shelved the planned opening of its South East division while also recently closing its central London office.
As well as the Brexit hit, Crest also said that woes in the new homes market are being compounded by falling numbers of transactions in the high-end second-hand housing market, which have led to long property chains.
The builder has taken action to prop up sales while also slowing some developments, but said this hit its profit margins, coming also at a time of rising cost inflation.
Its full-year results showed revenues rose 9% to £1.14 billion, while housing sales increased by 3% to 3,020 homes.
Average selling prices rose less than it initially expected, up 1.3% at £393,000 over the year.
Shares in Crest, which fell heavily after last October’s profit warning, were 6% higher on Tuesday as the result came in slightly better than some feared.
Analysts at Peel Hunt had pencilled in profits of £170 million, but said the results still “weren’t great”.
Experts at Liberum added: “Looking forward, the outlook remains challenging, and we do not expect Crest Nicholson to pursue completions at any cost.”