Crest Nicholson has said it expect profits to plunge amid “challenging” trading conditions.
In a gloomy trading update this morning, the housebuilder said: “Against a backdrop of persistently high inflation and rising interest rates, trading conditions for the housing market have worsened during the summer of this year.”
It said it now expects FY23 adjusted profit before tax to be around £50m.
At its half-year results, Crest Nicholson said it expected full-year adjusted profit before tax to be in line with the published consensus of £73.7m.
In January, the expectation in the City was for profits to drop below £100m from last year’s £129m.
Crest Nicholson said: “Economic uncertainty is deterring prospective home movers. Additional mortgage borrowing for those looking to upgrade or for those with low levels of equity, notably first-time buyers, has become significantly more expensive with no government support (following the end of Help to Buy) now in place to cushion this impact.”
It added: “Transaction levels across the industry have therefore weakened further, particularly in recent weeks. Although overall inflation is encouragingly starting to fall, core inflation and wage inflation both remain high with further interest rate rises forecast over the coming months. The group does not therefore expect to see a material improvement in trading conditions before its year end at 31 October 2023.”
In its interim results in June 2023 the group said it was forecasting a sales per outlet per week rate of 0.50 for the second half. However, for the seven weeks to 18 August 2023 this has been 0.25, “representing a progressively deteriorating trend”.
To send feedback, e-mail piers.wehner@eg.co.uk or tweet @PiersWehner or @EGPropertyNews
