Retirement home builder says combination of factors has hit bottom line
McCarthy & Stone confirmed it expects its full year operating profit to fall by up to 32% for the year to the end of August, as the retirement homes builder deals with what it called 鈥渃ontinuing economic uncertainty and a slower secondary market鈥�.
Back in June the group warned its operating profit for 2018 could be a third lower than last year, following a decline in both reservations and property prices.
And in a trading update issued today the firm said its operating profit for the year was expected to be between 拢65m and 拢73m, versus last year鈥檚 figure of 拢96m.
It said revenue for 2018 was expected to rise by nearly 1.5% to 拢670m, bolstered by a 10% increase in average selling price to around 拢300,000.
McCarthy & Stone, which will officially report its numbers for the year to the end of August 2018 on 13 November, said total legal completions fell 7% to 2,134 units.
It said volumes and operating profit had been constrained, 鈥渁s expected鈥�, by the heavy weighting of first occupations in the second half, continuing economic uncertainty and a slower secondary market.
The group also said prices had softened in the second half, particularly in the south of the country.
Jon Tonkiss, who became McCarthy & Stone鈥檚 interim chief executive following Clive Fenton鈥檚 retirement last month, said it had been a tough year for the group with 鈥渙ngoing adverse market conditions continuing to impact the business, and without the benefit of any additional government support for the retirement housing sector鈥�.
In April the group had urged the government not to slap leasehold reforms on the retirement homes sector, following an earlier pledge from the then-communities secretary Sajid Javid to crack down on 鈥渇eudal practices鈥� within the leasehold system in England, including a ban on leaseholds for almost all new build houses, following a series of scandals which saw ground rents charged to leaseholders rocket.
McCarthy & Stone began talks with the government over the issue and today said these discussions were ongoing.
鈥淲e believe that there is a strong case for a specific exemption for the retirement housebuilding sector and we are awaiting clarification on this matter.
鈥淯ntil this is received, we continue our planning to try and mitigate the potential impact on the business,鈥� it added.
No comments yet