Rising costs and 鈥榞enerally flat pricing鈥� hit housebuilder
Stagnant house prices and rising costs dented Crest Nicholson鈥檚 first half margins, the group revealed today.
Announcing a dip in pre-tax profits for the six months to the end of April 2018 the Chertsey-based housebuilder said most of its sales outlets had performed well, but higher-priced houses had proved more difficult to sell.
A slow second-hand market for top-end homes was also impacting sales, it added.
First half turnover rose 13% to 拢474m, while pre-tax profit dipped 2% to 拢61m after a hefty 17% hike in cost of sales.
Open market average selling prices, excluding private rented sector units, rose 5% to 拢439,000.
The group said it had seen build cost inflation running at between 3% and 4%, although it believed this was starting to ease.
Operating margins fell from 19.1% last half year to 17.2%, while operating margins for the full year are expected to be around 18%, at the bottom end of the firm鈥檚 18% to 20% guide range.
Chief executive Patrick Bergin said: 鈥淥ur experience of generally flat pricing against a back-drop of continuing build cost inflation has had an adverse impact on our margins and we have taken a number of actions to seek to offset build cost pressures and invest in areas of greater housing affordability.鈥�
Crest Nicholson has 鈥渁 strong balance sheet, is securing land at good margins and operates a disciplined business model, generating good returns whilst also contributing to the much-needed supply of housing in the UK鈥�, he added.
The firm is closing its central London office on New Fetter Lane and re-opening a South-east division based in Kent.
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