Crest Nicholson has issued a profit warning, forecasting adjusted profit before tax (EBIT) of £5 million to £15 million for the current financial year, according to the company. The warning sent shares plunging by more than 40% in early trading, the company said. Crest Nicholson attributed the downturn to rising costs, weaker demand, and prolonged economic uncertainty linked to the conflict in the Middle East, according to a company statement.
The company expects interest costs of £15 million and net debt of up to £120 million, Crest Nicholson said. It has entered early discussions with lenders to temporarily relax its banking covenants, the company added.
Crest Nicholson has cut its forecast for land sales to £40 million for the year to October 2026, down from earlier expectations of £75 million to £100 million, the company said. It has also reduced expected sales volumes to between 1,400 and 1,500 homes, compared with previous guidance of up to 1,700 homes, according to the company.
In its statement, Crest Nicholson cited rising costs, weaker demand, and prolonged economic uncertainty linked to the conflict in the Middle East as reasons for the profit warning, according to a company statement. The company warned over the impact of the Iran war on costs and buyer confidence, according to a person familiar with the matter. Crest Nicholson said it had seen a slowdown in land sales, with potential buyers becoming increasingly hesitant amid an 'uncertain' outlook, according to the company. It also reported a slowdown in new inquiries and visitor levels since its last update in March, as well as a 'marked' softening in sentiment among land buyers, the company said.
Despite the grim outlook, Crest Nicholson insisted it is not yet resorting to widespread discounting to shift homes, according to a person familiar with the matter. The company said it is focusing on cash generation and balance sheet optimisation rather than aggressive price cuts.
Over the past 12 months, the UK’s five largest housebuilders by turnover have all suffered steep declines in their share prices, according to market data. Barratt Redrow has fallen around 40%, Vistry Group is down 42%, Taylor Wimpey has dropped 23%, Bellway is down 18%, and Persimmon is lower over the period and down year-to-date, according to market data.
Analysts at Peel Hunt said the earnings guidance points to pre-tax profits being 'well below' the current consensus for £33 million, according to a note from the broker.