Crest Nicholson, a UK homebuilder, saw its shares fall sharply by up to 12% to 65p after announcing a statutory operating loss of $26.2 million for the six months ending April 30, a significant decline from the $18.8 million profit recorded in the prior year. This downturn was attributed to a more than halved gross margin of 7.0% and a 21% drop in revenues to $197.6 million from $249.5 million.
The company also revised its full-year earnings guidance, now expecting earnings before interest and tax (EBIT) to be at the lower end of its new range of $5 million to $15 million, down from an earlier projection of $15 million to $65 million made in April. This marks the second time Crest Nicholson has trimmed its full-year guidance, initially due to concerns about potential property tax changes and later exacerbated by economic and geopolitical uncertainties following the conflict in the Middle East. Home completions also fell to 584 from 739, and net debt nearly doubled to $141.8 million from $71.5 million.
Martyn Clark, Crest Nicholson's chief executive, acknowledged the challenging market but highlighted decisive actions taken to preserve liquidity and reduce capital intensity. The company is actively engaged in discussions with its lenders to amend certain aspects of its revolving credit facility, which are described as well-progressed. Despite resilient pricing, softening customer enquiries and market sentiment have led to a more cautious outlook for the remainder of the financial year. The company is prioritizing cash generation and balance sheet strength, reducing land buying, marketing non-core land for disposal, and slowing new site starts to align with revised sales expectations.
