Crest Nicholson Warns of Annual Loss Amid UK Housing Market Downturn
Financial Performance and Market Challenges
Operating Loss Forecast and Sales Decline
Sept 3 (Reuters) - Crest Nicholson warned on Thursday that it would swing to an annual operating loss, in the latest blow for the British homebuilder hurt by sliding sales, rising price competition and pressure over its debt covenants.
The company now expects a full-year operating loss of around £10 million ($13.5 million), reversing its previous forecast for a profit of between £5 million and £10 million for the fiscal year ending in October 2026.
It is the latest in a string of downgrades from the homebuilder, which said trading had been more subdued than expected over the summer season, with affordability constraints and competitive pricing continuing to drag on open market sales.
Crest Nicholson said its net open market sales rate fell to 0.35 over the last six weeks, down from 0.48 in the first half and 0.55 a year earlier.
Home Completion Targets and Cost Pressures
Housebuilder Cuts Home Completion Targets
HOUSEBUILDER CUTS HOME COMPLETION TARGETS
UK homebuilders are facing what some analysts have called one of the most challenging markets in recent history, with political turmoil and energy-driven cost inflation in the fallout of the Iran war adding to the strain.
Build Cost Inflation and Revised Targets
The builder said build cost inflation remained in line with previous guidance of around 3% to 4%, mostly on materials. However, it also lowered its annual home completions target to between 1,350 and 1,400 units from a prior expectation of 1,400 to 1,500.
"While the trading backdrop has remained difficult through the summer, we are making tangible progress on the actions within our control," CEO Martyn Clark said in a statement.
Debt, Covenants, and Financial Management
Net Debt and Covenant Amendments
Crest Nicholson expects year-end net debt of £70 million to £90 million, down from earlier guidance of £100 million to £120 million, helped by land disposals, cash optimisation and a fire remediation recovery.
Discussions to amend the covenants attached to its debt are continuing, though it flagged some slippage in the timetable.
Waiver Extension and Going Concern Risk
In July, Crest Nicholson said a waiver of its interest cover covenant had been extended to September 30, after earlier warning of a going concern risk if the covenants were not relaxed.
($1 = £0.7412)
(Reporting by Raechel Thankam Job in Bengaluru; Editing by Mrigank Dhaniwala, Nivedita Bhattacharjee and Jan Harvey)
