Crest Nicholson shares sank on Tuesday after slashing its profit outlook and warning it was being forced to open up discussions with lenders to relax covenants.
This was not the news investors wanted, and shares tumbled by over 35% in early trading on Tuesday. Crest Nicholson shares have now lost around 90% of their value since their 2017 peak.
Crest Nicholson said its slashing its full-year expectations as rising economic uncertainty dampens homebuyer enquiries and triggers a sharp pullback from land purchasers.
The housebuilder now expects EBIT of just £5m to £15m for the year to October, a significant downgrade from previous guidance. Volume expectations have been trimmed to 1,400 to 1,500 units, down from 1,550 to 1,700, while anticipated land sale revenue has been cut to around £40m from £75m to £100m, with the group no longer expecting material profit from disposals.
Crest Nicholson completed 1,691 homes in 2025 after completing 1,873 in 2024.
Open market reservations have held at the improved levels seen since mid-January, with trading remaining positive in the Midlands, South-West and Eastern divisions. However, the South division continues to underperform, with a noticeable drop-off in new enquiries and visitor numbers.
The current order book stands at 1,106 units.
The land market has deteriorated with Crest Nicholson reporting a marked softening in sentiment among prospective buyers, with reduced engagement in bidding processes and growing reluctance to transact at current market values. Only one land sale has been completed so far this financial year.
Higher energy costs are also feeding through, with the group building in elevated build cost assumptions for the remainder of the year.
It’s very difficult to take any positives away from today’s update, which is somewhat at odds with other housebuilders who have been marginally upbeat in recent weeks.
News that Crest Nicholson has begun discussions with lenders about temporary covenant relaxation will be a major concern for investors.