Crest Nicholson FY profits slump amid tough market; CEO to retire

UK housebuilder Crest Nicholson posted a bigger-than-expected fall in annual profits but said it was encouraged by an increase in customer inquiries as borrowing costs fell, while chief executive Peter Truscott announced he was stepping down to be replaced by Persimmon chief commercial officer Martyn Clark.

Adjusted pre-tax profits for 2023 fell to £41.4m from £137.8m a year earlier and analysts'forecasts of £44m.

The company, which last week issued a profit warning, said it expected the housing market to remain "challenging" in 2024, with elevated interest rates remaining in place until inflation falls to its target level of 2%.

"In addition, the absence of any government support for first time buyers, coupled with higher borrowing costs continues to impact affordability," it added.

Revenue fell 28% to £657.5m, reflecting the weakness in the housing market. Home completions were also much lower at 2,020 from 2,734 a year earlier.

There was also a £13m charge for a legal claim relating to a low-rise apartment block built by the group in 2019 that was damaged by fire in 2021.

"The combination of challenging trading conditions and incremental cost movements associated with Farnham and other legacy low-margin sites have led to a disappointing set of results in 2023,” said chief executive Peter Truscott.

“Recently there has been some positive macro trends with inflation and mortgage rates falling, which bode well for the housing sector. Although it is too early to gauge customer behaviour, we have been encouraged by an increase in customer interest levels and inquiries this calendar year.”

“We have acquired some excellent sites that are at advanced stages in the planning process, and have a strong strategic land pipeline, leaving us well positioned for the future when market conditions improve."

Reporting by Frank Prenesti for Sharecast.com