Crest Nicholson slashes housebuilding targets in ‘difficult’ summer

Crest Nicholson, a London-listed builder, has reduced its housebuilding and earnings targets, citing a "difficult" summer housing market. The company now predicts it will construct up to 1,400 homes this year, down from earlier forecasts of 1,500. Additionally, Crest Nicholson anticipates an earnings loss of £10m, whereas it had previously projected a profit between £5m and £10m.

The board disclosed these changes to investors on Thursday, attributing the market's subdued performance to competitors' use of competitive pricing, which has slowed sales. Rising building costs and mortgage rates resulting from the Iran war have compelled many major UK housebuilders to curtail land purchases and issue profit warnings.

Crest Nicholson has been engaged in urgent discussions with its lenders for months to negotiate more favorable debt terms; however, the negotiations have not yet been resolved. The firm published a £35m loss in July while stating that talks with lenders were still ongoing. Crest Nicholson's board emphasized that the company remains committed to constructive discussions with its lenders to modify its covenants and maintain adequate funding and liquidity.

Martyn Clark, the company's CEO, acknowledged the challenging trading conditions but noted that the group is implementing "tangible" cost controls and eyeing a return to the mid-premium segment of the housing market to achieve more stable sales rates. Despite the uncertainty surrounding the broader market recovery, Crest Nicholson is taking measures to safeguard its liquidity, enhance operational efficiency, and position itself for recovery once market conditions improve.

In the first half of the year, Crest Nicholson successfully reduced its debt by approximately £30m by selling surplus land. The company anticipates ending the year with net debt ranging between £70m and £90m.