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Crest Nicholson issues profit warning as CFO departs

Crest Nicholson has issued a profit warning as it blamed a weakening market and rising costs for eroding margins.

The housebuilder forecast pre-tax profit for the year to 31 October would be in the range of £170m-£190m, depending on whether certain “significant transactions” were completed during the next couple of weeks.

This is down from the £205m Crest forecast in its half-year results released in June.

The company said today that sales did not rebound strongly in September and October as expected, after slowing in the summer as buyers were put off by “persistent political and economic uncertainties”.

Cost inflation in housebuilding has also risen and damaged profitability, Crest added.

The board sought to reassure investors by outlining plans to increase cashflows in order to maintain a dividend of 33p for 2018 and 2019.

Crest’s trading update also revealed that chief financial officer Robert Allen (pictured) will leave the firm, having joined in January 2017.

The board has tasked executive chairman Stephen Stone with implementing a new strategy alongside chief executive Patrick Bergin.

Mr Stone stepped down as a CEO in January after leading the business for 12 years.

The company will now slow its building rates, sell off land and bring forward a number of bulk sales of around 200 units to the private rental and social housing markets, in an effort to “maintain profitability” for the next financial year.

Crest had previously confirmed in its half-year results that its London office would be shut to cut costs as demand in the capital dropped.

The company’s share price opened 14 per cent down this morning before recovering to around 5.5 per cent down.

Over the past 12 months its price has slid 45 per cent, while disclosed shorting of its shares stands at 4.5 per cent.

Barratt Homes published an update this morning that said trading was “strong”, although the number of new developments had dropped.

In its final results yesterday, Bellway announced it had sold more than 10,000 units in one year for the first time.

It also revealed it had set aside £5.9m to replace ACM cladding on some developments.

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