Crest Nicholson to ‘prioritize value over volume’ as profits weaken

Crest boss Nicholson has said the company will prioritize private sales in the coming year as he warned annual profits will be at the lower end of the forecast range.

Martyn Clark, who became CEO in mid-June, told investors the company wanted to “prioritize value over volume” during the 2025 financial year to help boost returns and margins.

The Surrey-based housebuilder expects adjusted pre-tax profits to be ‘at the lower end’ of the indicative range of £22 million to £29 million for the year to the end of October.

It attributes this to the increasing proportion of affordable homes being delivered and the ‘exchange of low-margin sites’.

Crest said it has built 1,873 homes, of which about 45 percent are affordable or private rental properties, up from 2,020 in the previous 12 months.

The FTSE 250 group cut its new build outlook in March due to a smaller order book and limited reservations in November and December.

The UK housing sector has faced a challenging time over the past two years as higher interest rates and pressure on the cost of living have dampened demand.

However, mortgage rates have since fallen to more affordable levels, leading to a recovery in housing transactions and prices.

According to financial information provider Moneyfacts, there were 6,645 mortgage products available last month, almost three times as many as in October 2022.

“It is encouraging that the broader economic landscape is becoming more favorable, with a more favorable interest rate environment and more government support to improve the planning process,” Clark said.

The new Labor government has pledged to build 1.5 million properties in five years, partly by hiring more planning officers and making it easier to develop on lower-quality ‘grey belt’ land.

Just 183,610 new homes were completed in Britain in the 12 months to March, according to the recent Office for National Statistics.

Crest Nicholson Shares were 0.6 percent lower at 152.4p on Wednesday morning, although they are down about 29 percent so far this year.

The company’s share price plummeted in August after it rejected two takeover bids from fellow housebuilder Bellway, with the larger proposal totaling £720m.

Crest turned down the offers, claiming it was ‘confident in its standalone prospects’, partly because of its ‘very attractive land portfolio’ and Martyn Clark’s leadership.

Clark joined the company a day after Crest cut dividend payments and issued its fifth profit warning in less than a year, along with a pre-tax loss of £30.9m.