Crest Nicholson has issued a profit warning as its house sales have dropped further than expected amid worsening trading conditions in the housing market.
The housebuilder has now adjusted its full-year profit forecast to close to £50million, down from the £74million that was forecasted in the half-year trading update.
Crest Nicholson outlined that difficult trading conditions in the housing market have only worsened over the last few months, with the current economic uncertainty deterring potential buyers.
The developer states that the whole industry has seen transaction levels weaken further recently, and, while overall inflation looks to be moving in the right direction, core inflation and wage inflation have both stayed high with further interest rate rises forecast in the near future.
Additionally, Crest Nicholson recorded a further cost movement of £4million for its Brightwells Yard development in Farnham. In its half-year trading update, the housebuilder had already set provisions of £11.6million to cover losses, but the latest addition to this will push the figure to over £15million.
Crest Nicholson has said that cutting overheads will be the priority for the next financial year as a result of the reduced profit forecast. This could result in its new East Anglia division being merged with the current Eastern division, and also potentially halting plans for a new Yorkshire division as the housebuilder rethinks its growth plans.
Chief executive of Crest Nicholson, Peter Truscott, said: “The board remains positive and confident about the outlook for Crest Nicholson. While the current trading conditions are challenging, over the medium term it expects inflation to abate and mortgage rates start to reduce.”
“In addition, the group has a strong financial position and an experienced leadership team who are used to trading through downturns in the cycle.”
