Profits flat at Crest Nicholson as housebuilder predicts lower margins in second half of financial year.

Interim pre-tax profit at housebuilder Crest Nicholson remained static at £35.9m for the six months ended 30 April 2005.

The housebuilder said that after a buoyant January and February the market slowed in the run up to the election and remained subdued. Chief executive John Callcutt said: “We expect the market to continue to be challenging in the short term.”

Forward sales have dropped significantly. At June 17 2005 forward sales were £271.2m compared to £325m in June 2004. Crest warned that group operating margins would fall by 1% because build cost inflation was not being covered by sales price gains, and because discounts were not benefiting from the same net sales price gains enjoyed in 2004.

Crest also said that mixed-use commercial sales, which have a lower operating margin, would make up a bigger proportion of sales in the current year.

Callcutt said: “Volume objectives will be difficult to achieve until purchaser confidence in the housing market improves.”

Despite the market conditions Crest Nicholson increased open market completions by 12% to 830 units but completion of affordable units fell to 256 from 312 in the same period last year. Crest expects to complete around 550 affordable units for the full year and increase this to over 700 in 2006.

Crest said that it had adopted a more cautious land buying approach in the six months to the end of April, but said that its land bank was currently strong because of large sites acquired at Bath Western Riverside and Camberley Town Centre.

In the medium term Callcutt said that the housing market fundamentals remained attractive, with supply shortages, low interest rates and good employment prospects.

Turnover in the company increased 11% to £315m, while pre-tax profit before exceptional items increased 6% to £38m.

The mid-morning share price was down 4p at 389p.