Crest Nicholson half-year results see sharp fall in profit

The latest figures from Crest Nicholson show that its pre-tax profit has dropped by 46% as a result of inflation and a slower market.
For the six months to 30 April, the housebuilder reported a pre-tax profit of £28.4million, a significant drop from £52.5million during the same period last year. The same period also saw revenue fall by 22% £282.7million, a reduction which Crest Nicholson suggested demonstrated the “economic uncertainty and lower confidence in the housing market.”
Sales and completions also took a hit year-on-year, with sales per outlet per week falling from 0.72 to 0.54, and overall completions down to 894 from 1,096.
Crest Nicholson stated that construction costs had been driven up by high inflation, while a slower market made it unable to mitigate this through selling prices.
The statement said: “In previous years housebuilders have been able to offset this impact through higher selling prices in an environment of strong demand.”
“However, in a more benign sales environment, this has not been possible and has consequently impacted our margin performance in the first half. Overall build cost inflation has remained at high single digit percentages throughout the period.”
Despite the downward trending figures, Crest Nicholson expects its adjusted profit before tax for the year to be in line with previous estimates of £73.7million, which represents a significant reduction from the previous year’s figure of £137.8million.
Peter Truscott, chief executive of Crest Nicholson said: “As we traded through the period, confidence started to return and this has been reflected in our trading metrics, which have sequentially improved throughout the period. Unemployment remains low and mortgage availability remains good albeit at more expensive rates.”
“The ongoing lack of housing supply is continuing to support house prices and these factors are also driving strong levels of rental inflation. The economic case for buying a home therefore remains compelling, but for many first-time buyers the higher cost of borrowing and the cessation of Help to Buy are prohibitive to realising this ambition.”
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