Crest Nicholson, a UK homebuilder, has revised its annual operating profit outlook to the lower end of its previously targeted range for fiscal year 2026. This adjustment comes amidst challenging market conditions characterized by subdued housing demand and broader economic uncertainty. The company's shares experienced a significant decline, falling as much as 11.6% following the announcement.
The company swung to an adjusted pretax loss of £17.3 million in the first half of the year, a stark contrast to the £7.9 million profit reported in the same period last year. Revenue also saw a decrease, falling 21% to £197.6 million from £249.5 million. Home completions dropped by 20% to 584 units, and the company now expects to complete between 1,400 and 1,500 homes for the full year, a reduction from last year's 1,691 completions. Net debt nearly doubled to £141.8 million from £71.5 million year-over-year.
Crest Nicholson attributed the volume reduction to economic uncertainty and a softening in consumer confidence since April, despite resilient pricing. The company is managing build cost inflation, averaging 3-4% primarily due to materials, through disciplined procurement. In response to the challenging environment, Crest Nicholson is prioritizing cash flow by reducing land buying, actively marketing non-core land for disposal, moderating new site starts, and aligning work in progress with revised sales expectations.
The company is also engaged in discussions with lenders to amend covenants and secure appropriate funding. Martyn Clark, Crest's chief executive, acknowledged the challenging market but highlighted decisive actions taken to preserve liquidity and strengthen operational discipline. Analysts from Peel Hunt noted that while the macro environment remains uncertain, there are signs of business improvement post-operational changes.
