Housebuilder announces cost-cutting measures “in response to market conditions”
Crest Nicholson has lowered its annual profit forecast for the second time in the space of a few months due to the “continued weakness” in the housing market.
The £780million-turnover housebuilder in a trading update today said it now expects its adjusted pre-tax profit for the year to 31 October to be “in the range of £45m to £50m”. This follows a previously lowering of its forecast in August from £73.7m to £50m.
The housebuilder said the profit figures were affected by an extra £11m in incremental build costs incurred on its 239-home, £115m Brightwells Yard regeneration in Farnham.
The firm also revealed the extent of its deteriorating cash position.
It said its year-end net cash stands at £64.9m.
It had previously warned net cash would fall to below £100m, down from £277m the previous year.
Crest Nicholson also announced some details of its plan for cutting costs following a review of its cash commitments outlined earlier this year.
>>See also: UK housebuilding recession: How much worse is it going to get?
It said it intends to reduce administrative expenses by £3m, will slow the pace of growth in its Yorkshire division to around 300-350 units by 2026 and merge its new East Anglia division into its eastern division.
It said it would “align” its “headcount and resources in existing divisions to the expected level of output” but did not specify a figure for job losses in the update.
Analysts Sam Cullen and Clyde Lewis of Peel Hunt said the lowered profit forecast is not a complete surprise but the “lower cash position is.”
They said: ”The debate remains how much of the pain is already reflected in the share price and how quickly the group is able to capitalise on growth if the market continues to improve.”
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