Firm puts opening of third regional division on ice because of slowing housing market
Crest Nicholson鈥檚 latest pre-tax profit fell 62% due to 拢105m it has set aside to cover its developer pledge charge as it confirmed that it was parking plans to open a new regional division this year because of the slowdown in the housing sector.
The housebuilder, in its full year results for the year to 31 October, today reported a pre-tax profit of 拢32.8m, down from 拢86.9m the year before.
The firm, along with 46 other housebuilders, last summer agreed in principle to pay to fix 鈥榣ife-critical鈥� fire safety defects on their own blocks going back 30 years under the 鈥榙eveloper pledge鈥�.
Crest Nicholson, which initially estimated its pledge cost at between 拢80m and 拢120m, has now recognised a 拢105m charge in its accounts for the work.
However, its adjusted pre-tax profit, which excludes exceptional items including the developer pledge, rose 29% to 拢137.8m, which the housebuilder said was in line with expectations.
Crest also increased its revenue 16.1% to 拢913.6m, boosted by a 17.5% increase in sales income aided by rising prices.
The group has shifted its focus away from London in the past three years and rolled out its standard house type, which it said is 鈥渢ypically more efficient to build and offered to customers at lower price points than the group鈥檚 legacy house types鈥�.
It said this shift would have reduced selling prices but this has been wiped out by the increased costs of building homes. The group鈥檚 average open market sales price rose from 拢359,000 to 拢388,000 year-on-year.
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The group also reiterated previously announced plans to halt the opening of a new regional division this year.
It said: 鈥淕iven the current macroeconomic uncertainty the group has decided to defer the planned opening of a third new division in 2023 until further notice and will adjust the pace of expansion across the group.鈥�
In October 2021, Crest announced a strategy to grow through geographical expansion. It has launched new divisions in Yorkshire and East Anglia and had been due to open a third this year.
The move follows other actions by major housebuilders to mitigate against the economic slowdown. Taylor Wimpey is , and
The firm increased its completions 13.6% to 2,734 homes. Open market completions jumped from 1,924 to 2,212 homes while affordable completions rose from 483 to 522.
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