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Crest Nicholson issues profit warning amid increased spend on fire safety
House builder Crest Nicholson has issued another profit warning as Brexit uncertainty hits sales and post-Grenfell fire safety work is costing the group an extra £17m.
The FTSE 250 firm, which has launched a strategic review under new management, today said it was recording the “exceptional charge” after considering government guidance on “combustible materials, fire risk protection and regulatory compliance on completed developments”.
In June, it was reported that Crest Nicholson was looking at whether action was required on a six-storey block of flats in Cambridge which has the same timber cladding as a block in Barking, where a devastating fire damaged a number of properties.
In an unscheduled trading update, Crest Nicholson also said it had experienced a “volatile sales environment in some of its regional businesses”, particularly in London, due to “ongoing customer uncertainty relating to Brexit and the economic outlook”.
It had previously warned on profits a year ago.
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Today the group said that pre-tax profits for its current year are now expected to be between £120m and £130m. This is 20% lower than previous guidance, according to analysts at Peel Hunt. In its last full year, pre-tax profits fell 15%, as it again blamed Brexit and a weak market.
Last month, Peter Truscott, former boss at Galliford Try, took up the role of chief executive at Crest Nicholson. He replaced Patrick Bergin, who left the group in March after just a year in the role.
Mr Truscott is carrying out a strategic review, which will include cutting “overhead and sales-related” costs. It will also include a more selective approach to the sale of land.
Mr Truscott said: “We are taking decisive action to ensure the business moves further and faster to make the most of the opportunities in front of it.
“While current market conditions remain uncertain, the prospects for Crest Nicholson over the medium term remain highly attractive.”
In August, Crest Nicholson pulled out of a 565-home scheme on council land in Hove, claiming it could not viably deliver any affordable housing at the site.
Shares in the firm were trading down nearly 8% in mid-morning trading at 377.4p.
