House builder Crest Nicholson has issued a profit warning after new home sales fell more sharply than expected this year due to high inflation and interest rate rises.
In a trading update, the company said it now expects adjusted profit before tax for the full-year 2023 to be around £50m, having previously anticipated a profit of £73.7m.
Crest Nicholson said trading had worsened during the summer thanks to persistently high inflation and rising interest rates, and although pricing “remained resilient” the economic backdrop was deterring prospective home movers and first-time buyers.
The group said it did not expect to see a “material improvement in trading conditions” before its year end at 31 October 2023 and given the market backdrop it is currently negotiating “several bulk deals on appropriate commercial terms with partners where it has developed strong relationships over recent years”.
In a statement, the house builder’s board said it “remains positive and confident about the outlook for Crest Nicholson. While the current trading conditions are challenging, over the medium term it expects inflation to abate and mortgage rates start to reduce. In addition, the group has a strong financial position and an experienced leadership team who are used to trading through downturns in the cycle. The long-term structural shortfall of housing supply versus demand continues to increase and the group has developed an attractive land portfolio”.
