*The housebuilder now expects a full-year loss after a torrid summer for sales, sending shares to fresh lows.*
Crest Nicholson (LSE: CRST) shares fell sharply on Thursday after the housebuilder issued its second profit warning of the year, with the stock down 12% to 53p as investors digested news of an expected swing into a full-year loss.
The group now expects an operating loss of around £10m for the year, a stark reversal from previous guidance of a £5m to £10m profit, as weaker-than-expected summer trading and aggressive pricing competition took their toll on the order book.
Crest also trimmed its full-year completions forecast to between 1,350 and 1,400 homes, down from an earlier range of 1,400 to 1,500, blaming affordability pressures among buyers and stiff price competition, particularly on bulk sales to other landlords. The company's net open-market sales rate slipped to 0.35 over the past six weeks, down from 0.48 in the first half and 0.55 a year earlier, underlining how quickly momentum has drained from the market over the seasonally quiet summer period.
The downgrade compounds an already difficult year for the housebuilder, which saw its shares tumble following a prior guidance cut in April. Thursday's fall leaves the stock down 62% year-to-date, reflecting mounting investor concern over the group's ability to stabilise trading. Build cost inflation has remained elevated at around 3% to 4%, adding further pressure to margins even as demand softens.
There was a rare bright spot on the balance sheet: helped by a land disposal, planned further asset sales and a fresh recovery of fire-safety remediation costs from a third party, Crest now expects year-end net debt of £70m to £90m, roughly £30m better than previous guidance. However, with sales momentum still weak heading into the final months of the year, investors will be watching closely for any further deterioration in trading or additional write-downs on remaining sites.
This report is based on Crest Nicholson’s announcement and coverage by UK Investor Magazine. Company announcements can be tracked via London Stock Exchange RNS and Investegate, and the full results calendar is worth watching for the next update.
This article is for general information only and does not constitute investment advice or a recommendation to buy or sell any security. Photo: Sean Pollock on Unsplash.
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