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Crest Nicholson to smash three-year targets with material imports

Crest Nicholson will hit a 2,500 legal completions target a year early, its chief executive has revealed, after it turned to European manufacturers to fill UK material shortages.

Stephen Stone told Construction News the group had originally aimed to reach the target by 2015/16, as announced in the company’s initial public offering in February last year.

But after it made the decision to import concrete blocks and bricks from Europe due to UK capacity demands, Crest Nicholson is poised to meet its 2,500 goal by the end of this financial year in October 2014.

He said: “We don’t believe [UK] manufacturers have got sufficient capacity at the moment, without opening up new resources, to deliver and meet rising volumes.”

The chief executive said he had heard of old brickwork factories reopening in the UK to respond to demand, which was positive news. But he added that concrete block manufacturers did not have the same potential to increase capacity in the near future.

“Brick manufacturers have really extended delivery dates, so opening up new kilns is going to bring those back to more manageable levels,” he said.

“But at the moment we are working with extending delivery dates and we’re having to plan that into our build programme, which is a constraint [although it is] one that I think manufacturers are responding to.

“Whereas with the block manufacturers, I’m not sensing the same potential increase in capacity, which is why we’re importing from Europe.”

Mr Stone anticipates importing concrete blocks and bricks to continue until 2015.

However, he added that he had not seen constraints in other materials industry such as timber, plaster board or steel and said he was “surprised” to hear of the closure of Taylor Wimpey’s timber frame factory, Prestoplan, in Lancashire this week.

The chief executive said it was not just supply chain constraints holding back volume growth and highlighted planning as a lengthy and “bureaucratic process”.

He said central and local government was improving this problem but stressed that it still took too long to clear reserved matters and precommencement conditions.

He added that this became a real issue when coupled with increased sale rates – as a result of Help to Buy – since housebuilders were using their landbanks and outlooks faster, placing pressure on developers to open sites quicker.

This will be the second year of double-digit growth for Crest Nicholson, after it recorded a 15 per cent increase in housing completions with 2,172 for the year ending 31 October 2013, compared with 1,882 completions in 2012. The latest figures were up 24 per cent from 2011, when completions stood at 1,520.

Crest Nicholson saw a 40 per cent jump in its profit before tax to £80.9m for the year ending 31 October 2013, compared with £62.1m for 2012.

Overall revenue for the year ending 31 October 2013 was up 30 per cent at £525.7m, compared with £408m for the same period in 2012.

The prime minister this week reaffirmed the government’s commitment to cut more than 100 standards applied to new homes to fewer than 10.

Mr Stone said this was a positive move, but that he would await the government’s response on the Housing Standards consultation, due in the coming weeks.

Asked what he hoped to see in the response, Mr Stone said he would like to see government “steer away from space standards” and focus on fabric efficiency standards with design criteria instead.

Mr Stone was sceptical that further simplification of planning system would be seen anytime soon.

On skills and apprenticeships, the chief executive said Crest Nicholson was “playing our part” in getting younger workers into housebuilding, but added that the government had to re-examine the education process to encourage children and young adults to get engaged in construction, as opposed to automatically going down an academic route.

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