Crest Nicholson warns on profits but points to improving conditions

(Sharecast News) - Home construction company Crest Nicholson has delivered a profit warning as a result of higher-than-expected costs as it announced an additional one-off charge from a legal claim. The group said that adjusted pre-tax profit for 2023 is now expected to be £41m, lower than the £45-50m range given in November. That would mark a 70% reduction from £137.8m in 2022.

The company's zero-margin scheme, Brightwells Yard in Farnham, was expected to record £11m of costs in the second half as work continued on completing certain legacy sites. However, "further additional costs have been identified" following a review, it said.

In addition, Crest Nicholson said it now expects to take a £13m one-off, non-cash hit due to a recently received legal claim relating to a low-rise apartment scheme which was damaged by fire in 2021.

"The group is addressing this claim diligently and efficiently and will provide further details in our preliminary results," the company said ahead of its annual report on 23 January.

Positively, Crest Nicholson said it is seeing a "more constructive backdrop for house buyers and the wider housing market" in 2024 as a result of the recent reduction in mortgage rates.

"Although it is too early to gauge customer behaviour, we have been encouraged by an increase in customer interest levels and inquiries this calendar year."