- Shares have fallen 21% over the past year
- Full year 2023 pre-tax profit now expected to be £41 million
- One-off charge of £13 million related to legal claim
Shares in Crest Nicholson (CRST) were down over 4% to 207p as the housebuilder issued a profit warning because of higher costs and a one-off charge from a legal claim.
The group now expects a full-year pre-tax profit of £41 million for the year ending 31 October 2023 which is below the £45 million to £50 million range stated last November.
Following a review, the company said that it had recorded ‘an incremental cost movement of approximately £11 million in the second half of 2023 as the group continued to work on completing legacy sites.
In addition, the group expects to recognise an exceptional charge of £13 million in respect of a legal claim that it has recently received relating to a low-rise apartment scheme built by the group which was damaged by fire in 2021.
This is the group’s second profit warning in as many months. Last August the housebuilder said trading conditions had worsened over the summer months with high inflation and rising interest rates to blame.
Russ Mould, investment director at AJ Bell said: ‘While there may have been a break in the clouds looming over the house building sector the latest update from Crest Nicholson shows life remains tough.
‘The company is seeing some encouraging signs in terms of enquiries but that is yet to translate to customer behaviour and the property market remains a fragile beast. There is hope, but as yet no guarantee, that the coming months will bring further reductions in mortgage costs as the Bank of England cuts rates.
‘If it is to be a beneficiary of any improvement in the outlook, Crest Nicholson must put operational issues behind it.’
POSITIVE ABOUT THE FUTURE
The house and apartment builder however tried to remain positive and said it was seeing a ‘more constructive backdrop for house buyers and the wider housing market’ in 2024 because of the recent reduction in mortgage rates (by some lenders).
‘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.’
The group will provide further details at their preliminary results on 23 January.
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Sabuhi Gard) and the editor (Martin Gamble) own shares in AJ Bell.
