Crest Nicholson warns of full-year loss as talks with lenders drag on

Crest Nicholson has warned it now expects to report a loss before earnings of £10m in its full-year accounts after sales slowed over the past few weeks.

The housebuilder, in a trading update this morning, said it will report an Earnings Before Interest and Taxes (EBIT) loss of £10m in the year to 31 October. It had previously forecast an EBIT profit of between £5m and £10m.

The firm also said it now expects completions of between 1,350 and 1,400 in the year, slightly down on the 1,400 and 1,500 previously stated.

And Crest added it remains in discussions with lenders to “amend its covenants and ensure that it has an appropriate level of funding and liquidity going forwards” but now anticipates “some slippage in the current timetable”.

The firm previously said in July that discussions with lenders to amend conditions on a £250m revolving credit facility were “well advanced”.

In today’s update the firm said over the past six week its net open market sales rate fell to 0.35 sales per outlet per week, from 0.48 in the first half of the year and 0.55 in the same period last year.

It said: “Market conditions have been more subdued than expected through the seasonally quieter summer trading period, with affordability constraints and competitive pricing continuing to weigh on open market sales rates.”

It said the reduction in profitability reflects lower expected completions following weaker open-market demand and continued competitive pricing, particularly in bulk transactions, also resulting in some write-downs on a small number of sites.

But Crest said its year-end net debt is now expected to be better than previously indicated at between £70m and £90m, compared to £100m to £120m as previously forecast.

Martyn Clark, chief executive of Crest Nicholson, said “While the trading backdrop has remained difficult through the summer, we are making tangible progress on the actions within our control. Our cash optimisation programme is delivering with the expected year-end net debt position now materially better.”

Clark added that Crest Nicholson is “building a stronger operational platform through tighter cost control, improved procurement, disciplined land and WIP management, and a continued focus on build quality and customer service”.