Housebuilder announces series of cost-cutting measures
Crest Nicholson has lowered its annual profit forecast for the second time in the space of a few months and said it was looking at making job losses to cut overheads.
In a trading update this morning, the £780m-turnover housebuilder said it now expects its adjusted pre-tax profit for the year to 31 October to be “in the range of £45m to £50m” because of the “continued weakness” in the housing market. 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 of build costs on its 239-home, £115m Brightwells Yard regeneration in Farnham, Surrey.
Crest Nicholson also announced some details of its plan for cutting costs following a review of its cash commitments outlined earlier this year.
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It said it would reduce administrative expenses by £3m, slow the pace of growth in its Yorkshire division to around 300-350 units by 2026 and merge its new East Anglia arm n into its Eastern division.
Crest 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.
The firm also revealed the extent of its deteriorating cash position with its year-end net cash standing at £64.9m. It had previously warned net cash would fall to below £100m, down from £277m the previous year.
In a brokers note, Investec said: “Overall, the update is disappointing in terms of the extra costs being flagged again and consensus PBT and net cash likely moving lower. Costs are being addressed but FY24 looks like another difficult year.”
And Peel Hunt added: “The weaker PBT as not a complete surprise, given the challenges at Farnham, but the lower cash position is.”
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