Crest Nicholson blames Brexit as it warns over profits

Crest Nicholson

Housebuilder Crest Nicholson has warned over profits as it blamed Brexit uncertainties for putting off buyers in the traditional strong autumn selling season.

The group said sales had remained “subdued” after falling in July and August, with prices dropping in some London areas where affordability is stretched.

It warned annual profits will now come in at around £170 million to £190 million as the property market has proved “more difficult” than expected across London and the South of England.

This would mark a significant fall on the £207 million pre-tax profit posted the previous year.

Crest shares fell 6%, with the warning also sparking hefty shares declines across the sector.

Berkeley Group was 3% lower in the FTSE 100, with Persimmon 2% down.

Crest said executive chairman Stephen Stone is leading a new strategy, supported by chief executive Patrick Bergin.

But Robert Allen, chief financial officer, is stepping down and will leave the company after a short handover period.

The group said the turnaround aims to stem the decline in profits for 2018-19 and hold profits flat in the face of “market uncertainty”.

Mr Stone said: “The usual autumn pick-up in sales volumes has not been evident during September and October, with many customers putting off decisions to buy whilst current political and economic uncertainties persist.

“Mindful of the current uncertain market environment, our new strategy will focus on shareholder returns by prioritising cash flow and dividends, maximising the value in our portfolio, and improving operational efficiency.”

It comes after Newcastle-based lender Bellway cautioned on Tuesday over the threat of a Brexit hit to next spring’s busy selling season.

Crest added that woes in the new homes market were being compounded by falling numbers of transactions in the high-end second-hand housing market, which had led to long property chains.

The builder said it took action to prop up sales while also slowing some developments, but said this hit its profit margins, which are now set to be below its previous guidance of 18%.

As part of its overhaul, Crest is looking to cut costs and said it has shelved the planned opening of its South East division while “current market uncertainties continue”.

There was more gloom over the housing market as official figures showed property price growth eased back to a five-year low in August.

The average price of a UK house rose 3.2% in the year to August, according to the Office for National Statistics/Land Registry house price index – the weakest rate of growth since August 2013.

London saw prices fall by 0.2% in the year to August.

Samuel Tombs at Pantheon Macroeconomics said the market would remain under pressure amid Brexit worries.

“Many buyers likely will defer purchases, as they did in 2016, until some clarity emerges regarding Brexit, forcing sellers who need to move to reduce asking prices,” he said.