Operating margins taking hit, retirement specialist admits

McCarthy & Stone plans to increase its part-exchange activity and development of rented accommodation to counterbalance tough market conditions.

In a trading update ahead of releasing its annual numbers early next year, the retirement homes builder said the impact of “challenging” times would be felt in its operating margin, which would be hit by what it called “an ongoing need for increased levels of part-exchange”, as well as a lower mix of sales from the south east.

McCarthy & Stone

John Tonkiss, the group’s chief executive, said the group was committed to finding a strategic capital partner to work on expanding its rental offer.

McCarthy & Stone could be looking at a quarter of its units in future being rental properties, such is the level of demand.

The group, which plans to announce its results for the 14 months to the end of October 2019 on 28 January, said turnover for the period was expected to be around £720m, versus £672m for the 12 months to the end of August.

The group shifted its year end back by two months as part of its strategic review, which was launched in September 2018.

Operating profit for the 14-month period was forecast to be within analysts’ consensus range of between £64m and £71m, against £67.5m last year.

The group is also aiming to develop some of its homes using volumetric and panelised systems, with work on the first scheme using MMC, in Hexham, in the north east, expected to start next year.