Crest Nicholson has scaled down its guidance for its sales volume and anticipates lower land sales as it faces increased macro-uncertainty.
The housebuilder is also in discussions with lenders as it looks to secure its position against the impact of the Middle East conflict.
Crest Nicholson’s trading update stated that the ongoing conflict was increasing the prospect of “a prolonged higher interest rate environment, renewed cost pressures and a deterioration in consumer confidence”.
The housebuilder said that it had seen a continuation in improved levels of open market reservations since January, however, this had been offset by a drop in new enquiries and visitor levels. The trading update also flagged a “softening in sentiment among prospective land purchasers”, with buyers becoming more cautious in the face of the uncertain outlook.
As a result of the current environment, the trading update said that the Group is “prioritising cash and balance sheet strength”, targeting a faster reduction of its finished plots inventory, particularly on completed apartment schemes and further tightening of WIP controls across its developments.
Expecting the current conditions to continue for the remainder of its financial year 31 October 2026), the housebuilder has subsequently revised its guidance for expected sales volumes, now predicting between 1,400 and 1,500 units, down from 1,550-1,700 units.
Crest Nicholson has also reduced its land sales forecast, now expecting a revenue of £40million, significantly below its previous estimates of £75million-£100million, stating that it did not expect to make a “material level of profit on disposals in the remainder of the financial year”.
The housebuilder now expects its pre-tax earnings before interest to reach between £5million and £15million for the financial year, and predicts interest costs of around £15million along with a revised year-end net debt position of between £100million and £120million.
As a result, it was now “in the early stages of seeking temporary banking covenant relaxation”, and that a further update will be provided following discussions with the Group’s lenders.
Martyn Clark, CEO of Crest Nicholson, commented: “We remain committed to our strategy of positioning Crest Nicholson as a leading player in the mid-premium housing market and continue to make good progress on our Project Elevate transformation initiatives.”
“However, it is increasingly clear that the current macroeconomic uncertainty is contributing to the prospect of a more prolonged higher interest rate environment, renewed cost pressures and a deterioration in consumer confidence. Therefore, in the near term the right and prudent course of action is to adapt quickly to the challenges presented by the current trading environment and focus on prioritising cash generation and optimising our balance sheet position. We are doing what needs to be done to navigate this uncertainty to best position the business to deliver the attractive medium-term opportunity.”
