Crest Nicholson profits fall, but sales rise thanks to strategy rethink

Housebuilder Crest Nicholson has seen half-year profits drop after coming under pressure from rising build costs and as property price growth stalled.

The group reported an 11% fall in pre-tax profits to £64.4 million for the six months to April 30.

Crest – which has paused its growth strategy due to Brexit uncertainty – said revenues rose 7% to £501.9 million as it was boosted by a shift away from London’s private sales market towards partnerships and joint ventures.

But profit margins were hit by build cost inflation at 3%-4% and “generally” flat pricing in the market, the company said.

Crest said trading had been “encouraging” amid Brexit uncertainty and stuck by its full-year forecasts thanks to a 15% rise in forward sales to £625.2 million.

Shares in the FTSE 250-listed firm rose 2%.

Interim chief executive Chris Tinker said: “The group has made good progress on delivering its revised strategy during this period of heightened political uncertainty.

“Having paused growth and de-risked our open market sales programme through increased pre-sales and partnership working, it is pleasing to report our first-half revenues up 7% from this time last year.”

Crest said average selling prices lifted 8% to £413,000, but warned that this would mark the high point for growth as it moves away from higher value homes and areas, such as London.

In January, Crest reported a 15% tumble in annual profits to £176.4 million, blaming Brexit uncertainties for putting off buyers and “breeding unease”, compounging an already sluggish London market.

Crest had already warned over profits in October after trading in the traditionally-strong autumn selling season had been subdued.

It announced that chairman Stephen Stone is leading a new strategy which aims to stem the decline in profits, while new chief executive Peter Truscott is set to join from rival Galliford Try in September.

Despite the half-year profits fall, Liberum analysts said the revenues rise signalled that Crest’s strategy rethink was beginning to pay off.

They said: “Crest Nicholson is starting to see the fruits of its revised strategy more quickly than we or management originally expected.”