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11 Jun 2019 | 07:38

Crest Nicholson profits slide as margins dented by rising costs, strategy tweak

Crest Nicholson said first-half pre-tax profits fell 11% as rising input costs and the company's strategy to de-risk its open market sales programme by pre-selling more homes hurt margins. The strategy shift, however, helped the homebuilder maintained its full-year guidance. For the six months ended 30 April, pre-tax profit fell 11% to £64.4m, while revenue rose 7%. Sales per outlet week in the first half of the year, was flat year-on-year at 0.78. The current revenue and forward sales for 2019 rose 4% to £870.1m, and the Total forward sales £625.2m Operating margins fell 270 basis points to 14.1% for the half, from 16.8% achieved last half year, which the company blamed on its new strategy to 'de-risk the business plan through increased forward sales to PRS investors and Registered Providers against a backdrop of continuing build cost inflation at 3-4%.' But the change in strategy provided increased certainty and reduce forward sales risk. Total forward sales rose 15% to £625.2m. Looking ahead, the company said it would enter the second half of the year with 'encouraging forward sales, a growing outlet base and an increased proportion of homes for sale at more affordable price points.' 'Given the current market, the Board remains confident in the prospects for the rest of the year and in achieving earnings in line with consensus,' it added.

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