Crest Nicholson, a Surrey-based housebuilder, issued an unscheduled trading update warning of challenging market conditions and revised financial expectations. The company reduced its projected home completions for the year ending 31 October to between 1,350 and 1,400 units, down from its prior guidance of 1,400 to 1,500 units.
Market conditions deteriorated during the summer months, with the company citing weaker sales momentum compared to the first half of the year. Management attributed the slowdown to affordability constraints facing potential buyers and increased competitive pricing pressures within the sector. As a result, Crest now anticipates an operating loss of approximately £10m, reversing an earlier projection of profitability between £5m and £10m. This represents the third profit warning issued since April. The announcement prompted a significant market reaction, with the company’s share price declining more than 10% following the disclosure.
Cost pressures continue to affect operations, with building material prices remaining elevated at 3% to 4% above prior levels. The company has undertaken restructuring measures in response to current conditions, including closure of one divisional office and reduction of 50 positions. Despite these headwinds, Crest reported progress on debt reduction, now expecting net debt of £70m to £90m at the fiscal year-end, improved from the previously flagged £100m to £120m range.
Crest management has been engaged in ongoing negotiations with lenders regarding banking covenants to secure adequate future funding. The company characterized these discussions as constructive, though anticipated delays in reaching final agreements. Chief Executive Martyn Clark emphasized the company’s focus on controllable operational improvements while acknowledging uncertainty regarding broader market recovery timing. Industry observers have noted that mortgage pricing has been affected by recent global developments, with UK swap rates reaching three-year highs following international bond market volatility.
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