Crest Nicholson has revealed that it took a huge profit hit last year as Covid-19 ripped through the economy, but still managed to beat its even gloomier expectations.
The housebuilder said that its adjusted pre-tax profit dropped 62% in the year ending October 31.
However, the £45.9 million figure was still a little ahead of the guidance that the company had provided, of £35 million to £45 million. Shares rose 1.7% on the news.
The share performance might have been better, had not analysts already been heavily predicting that Crest would hit the upper end of its expectations. An average of all analysts found they believed pre-tax adjusted profit would reach £44 million.
On a non-adjusted before tax basis the company dropped to a £13.5 million loss from a profit of £102.7 million a year earlier.
Looking forward, through 2021 and 2022, the next phase of Crest Nicholson’s recovery will be improving operating margins to be in line with industry peers
The financial year started off marred by Brexit worries, which meant that customers delayed major decisions such as homebuying between October and December 2019.
But after the December 2019 general election provided some certainty on the stance the Government was likely to take towards the EU negotiations, the market reacted positively, Crest said.
“By the time we reached early March we had delivered our strongest sales week in over 12 months and our confidence was growing as we explored further opportunities for growth,” said chief executive Peter Truscott.
But then Covid-19 hit, and came to overwhelmingly set the course for Crest and most other businesses over the following months.
“The impact of Covid-19 has clearly had a defining impact on this year’s financial performance. It has challenged all of us in ways we could not have predicted,” Mr Truscott said.
The company came to cancel its dividend payout to shareholders and claim millions in furlough money to keep its staff’s salaries flowing. In December this year, however, it repaid £2.5 million to the Government for furlough cash.
The company also made what it called “operational improvements” in a bid to cut costs as the pandemic struck.
Mr Truscott said: “We had to make some difficult decisions during this year but because we acted swiftly we have ensured the group enters 2021 in strong shape and will remain resilient to whatever challenges this year brings.”
Revenue dropped 38% to £677.9 million in the year ending October.