Crest Nicholson has announced a significant downgrade to its financial outlook, now expecting an annual operating loss of approximately £10 million for the year ending October 2026. This reverses its previous forecast of a £5 million to £10 million profit. The company also reduced its annual home completions target to a range of 1,350 to 1,400 units, down from an earlier guidance of 1,400 to 1,500. This bleak outlook is attributed to weakened sales, increased price competition, and ongoing pressure related to its debt covenants.
The homebuilder reported that its sales pace has deteriorated further over the past six weeks, with the net open market sales rate falling to 0.35. This compares unfavorably to 0.48 in the first half of the year and 0.55 during the same period last year, indicating a substantial slowdown in market demand due to affordability constraints and competitive pricing. The update led to a sharp decline in Crest Nicholson's shares, which tumbled more than 13% to a record low in early trading. Analysts like Peel Hunt, despite flagging weak sales, maintained a 'buy' rating with a 90p price target, noting the shares were trading at a significantly low 0.2 times price to tangible net asset value.
Despite the operational challenges, Crest Nicholson provided some positive news regarding its debt reduction efforts. The company now anticipates year-end net debt to be between £70 million and £90 million, an improvement of approximately £30 million from its previous guidance of £100 million to £120 million. This progress is partly due to additional land disposals and the recovery of material fire remediation costs from a third party, which will be recorded as an exceptional profit item. The company is also in ongoing discussions with its lenders to amend covenants, although the timeline for these discussions has slipped.
The broader UK homebuilding sector also felt the impact of Crest Nicholson's warning, with other major players experiencing declines. Vistry Group saw a drop of over 4%, Bellway lost around 2%, and Taylor Wimpey, Persimmon, Berkeley Group, and Barratt Redrow all declined by approximately 1.5% to 2%. This suggests that Crest Nicholson's comments on affordability, sales rates, and pricing are seen as indicative of wider market conditions, although its balance sheet and covenant concerns are primarily company-specific.
