Crest Nicholson to ‘prioritize value over volume’ as profits weaken

Crest boss Nicholson has said the company will prioritize private sales next year as he warned annual profits will be at the lower end of his forecast range.

Martyn Clark, who took over as chief executive in mid-June, told investors the company wanted to “prioritize value over volume” during the 2025 financial year to help boost profitability and margins.

The Surrey-based housebuilder expects adjusted pre-tax profits to be “at the lower end” of its guidance range of £22m to £29m for the year to the end of October.

He blamed this on the increasing proportion of affordable properties delivered and the “shift away from low-margin sites”.

Crest said it built 1,873 homes, about 45 percent of which were private or affordable rental units, compared with 2,020 in the previous 12 months.

The FTSE 250 group lowered its outlook for new builds in March due to a lower order book and reduced bookings last November and December.

Britain’s housebuilding sector has fallen on hard times over the past two years as higher interest rates and cost of living pressures have dampened demand.

However, mortgage rates have since dropped to more affordable levels, spurring a rebound in residential transactions and prices.

According to financial information provider Moneyfacts, there were 6,645 mortgage products available last month, almost triple the number in October 2022.

“It is encouraging that the overall economic outlook is becoming more favorable, with a more benign interest rate environment and increased government support to improve the planning process,” Clark said.

The new Labor Government has promised to build 1.5 million properties over five years, partly by employing more planning officers and facilitating development on lower quality “grey belt” land.

Only 183,610 new homes were completed across the UK in the 12 months to March, the Office for National Statistics recently revealed.

Crest Nicholson Stock They were down 0.6 per cent at 152.4p on Wednesday morning, although they have fallen around 29 per cent so far this year.

The company’s share price plummeted in August after it rejected two takeover bids from housebuilder Bellway, with the largest bid totaling £650m.

Crest rejected the offers, claiming it was “confident in its independent prospects”, partly due to its “highly attractive land portfolio” and the leadership of Martyn Clark.

Clark joined the company a day after Crest cut dividend payments and declared its fifth profit warning in less than a year along with pre-tax losses of £30.9m.