Crest Nicholson shares plummeted on Thursday after it warned it would slip to a full-year loss as weaker summer demand and competitive pricing hit sales.
The company said it now expects to report an operating loss of around £10m for the year, having previously guided to a profit of £5m to £10m. It also lowered its forecast for home completions to between 1,350 and 1,400, from 1,400 to 1,500.
When it rains, it pours when it comes to profit warnings, and today’s announcement follows a prior guidance downgrade in April that sent shares spiralling.
Crest Nicholson shares were down a further 12% to 53p at the time of writing today on the back of today’s revisions. Shares are down 62% year-to-date.
Today’s downgrade is a consequence of softer open-market demand, continued pricing pressure, particularly on bulk sales to other landlords, and further write-downs on a small number of sites.
Trading was subdued over the seasonally quieter summer, with its net open-market sales rate falling to 0.35 over the past six weeks, down from 0.48 in the first half and 0.55 a year earlier. Crest pointed to affordability constraints and competitive pricing, while build cost inflation held at around 3% to 4%.
There was some minor good news on the balance sheet, but it was insignificant compared to concerns about sales. Helped by a land disposal, further asset sales still to come, and a fresh recovery of fire-safety remediation costs from a third party, Crest now expects year-end net debt of £70m to £90m, some £30m better than its previous guidance.