MARKET REPORT: Housebuilder Crest Nicholson rocked as it warns of slowdown

The storm clouds gathering over the housing market darkened as one of Britain’s biggest builders warned of a further slowdown.

Just 24 hours after lender Halifax announced that prices fell year-on-year for the first time in more than a decade, Crest Nicholson said rising interest rates threaten to erode demand and confidence.

The comments came as the FTSE 250 company reported a 60 per cent slump in half-year profits to £20.9m after sales fell by more than a fifth to £282.7m. Shares fell 7.1 percent, or 17.8 pence, to 231.6 pence.

Crest built 894 homes in the six months to the end of April, up from 1,096 in the same period last year, but prices “remained robust” amid a housing shortage.

Chief executive Peter Truscott said the start of the financial year in November, in the wake of September’s mini-budget, saw a downturn in business as mortgage rates rose, adding: “Rapidly declining consumer confidence and rising interest rates translated into immediately into a weaker demand. As we traded through the period, confidence began to return.

‘The economic arguments for buying a house remain convincing, but for many first-time buyers the higher costs of borrowing and the discontinuation of Help to Buy are unaffordable.

If interest rates continue to rise and remain high for a long time, this will only exacerbate the problem.’

Construction group Galliford Try went the other way after announcing plans to return cash to shareholders following the end of a long-running contract dispute.

The company will receive £26 million and while part will be invested in the company, a ‘significant’ part will be handed over to investors via a special dividend of 12 pence per share in October. The stock rose 7.9 percent, or 14.6 pence, to 200 pence.

It was a nervous session in equity markets around the world as rising government bond yields and news that the Eurozone was in recession weighed on sentiment.

The FTSE 100 fell 0.3 percent, or 24.60 points, to 7599.74, while the FTSE 250 fell 0.2 percent, or 44.72 points, to 19,107.55.

Vodafone fell 5.5 percent, or 4.3 pence, to 74.15 pence as it approached a £15 billion merger of its UK operations with Three.

Stock Watch – RWS Holdings

RWS Holdings rose 10.7 percent, or 24.4 pence, to 251.8 pence as the translation agency saw an increase in activity.

The group, whose chat tool has helped translate documents between a joint US and South Korean military division, said “softer activity levels and slower decision-making in certain customers” should improve in the six months to the end of March.

It reiterated its forecasts for the year, outlining cost savings and announcing a share buyback program worth up to £50 million.

Reports suggest a deal between Vodafone and Three’s Hong Kong owner CK Hutchison could be announced today.

Asset manager M&G posted £1bn of net inflows in the first quarter as it shrugged off expected repayments from institutional clients in the wake of the mini budget as bond market chaos wreaked havoc on markets. Shares rose 1.4 percent, or 2.8 pence, to 201.2 pence.

Mitie rose 3.2 per cent, or 3.1 pence, to 99.5 pence after a record annual turnover of £4.05 billion for the 12 months to the end of March – up from £4 billion a year earlier as operating profit rose from £72m to £117m.

Fellow outsourcer Capita struck a £33 million deal to sell five software companies to Advanced AdvT, the investment vehicle used by technology mogul Vin Murria in a failed bid to buy M&C Saatchi.

The companies, which Capita described as ‘non-core’ to operations, generate £35 million in annual revenue and £3 million in profits.

Murria said: ‘We are excited to take on new opportunities and, with a significant war chest, the company is well placed to execute mergers and acquisitions that are synergistic and contributory.’ AdvT shares were suspended pending more information on the deal. Capita rose 1.6 percent, or 0.52p, to 33.36p.

Heavy equipment rental company Ashtead, which trades under the Sunbelt brand, gained 0.8 percent, or 44p, to 5330p, after HSBC raised its target price from 6175p to 6250p.

Shipping group Clarkson made waves — up from 4.2p, or 125p, to 3100p — after JP Morgan raised its target price from 3740p to 3840p.