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Crest Nicholson margins hit by higher costs, flat house prices


BRITISH housebuilder Crest Nicholson Holdings Plc forecast full year operating margins at the bottom end of its guidance on Tuesday, saying it had been hurt by rising construction costs against a background of flat house prices.

Crest, which is focused on southern England where house prices have long been higher than elsewhere in the United Kingdom, said it would invest in areas of greater housing affordability as part of efforts to shore up performance.

Both it and fellow builder Bellway, in separate releases, said demand for homes remained robust and reported rising sales.

But Crest, which traditionally focuses on homes at higher sales points, said it would continue to be affected by a slow market in existing homes which was likely to restrain overall volume growth in the segment.

It expected operating margins for the full year to be around 18 per cent, at the bottom end of the company's 18 per cent to 20 per cent guidance range.

"We have taken a number of actions to seek to offset build cost pressures and invest in areas of greater housing affordability," the company said.

Crest's revenue rose 13 per cent to £473.88 million (S$846.62 million) for the six months ended April 30, while operating profit rose just 1 per cent to £81.4 million.

Operating profit margin fell to 17.2 per cent in the half year from 19.1 per cent a year earlier.

In contrast, larger rival Bellway said its pricing environment was firm, with many sites reporting modest, single digit price rises, although the rate of increase has moderated compared to last year.

Bellway, which reiterated its full year operating margin outlook of 22 per cent on Thursday, said demand was most pronounced for affordably priced family homes countrywide, including in Scotland, Essex and the Midlands. REUTERS

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