House-builder Crest Nicholson reports pressure on its profit margins as house prices flatten out but build costs continue to rise.
In a trading update today for the six months to 30th April 2018, Crest Nicholson reports an 18% rise in the number of unit completions in the period to maintain revenue growth.
It said that the combination of flat pricing and build cost inflation at 3-4% will mean that operating margins for the full year are expected to be around 18%, at the bottom end of its 18-20% guided range.
Given this, Crest Nicholson is exploring ways to drive costs down to protect margins and address areas of production constraint in the medium term.
Chief executive Patrick Bergin said: “The group has delivered a good sales performance in the first half of the year. The business continues to increase the number of homes built and carries positive momentum into the second half of 2018, with steady outlet growth and higher forward sales.
“Flat pricing has had a negative impact on margins, but volumes in the new build housing market continue to be robust and Crest Nicholson remains well positioned to grow volumes and deliver the homes that the UK needs, while continuing to focus on delivering strong returns for shareholders.”
This article was published on 16 May 2018 (last updated on 16 May 2018).