Crest Nicholson to review ‘all cash commitments’ as sales drop

Housebuilder Crest Nicholson is to review “all cash commitments” next year as it faces up to a diminishing cash position in light of the weakening housing market, executives at the business have said.

The firm’s group finance director Duncan Cooper told analysts yesterday that Crest would likely end the year with less than £100m in net cash after the firm reported that sales had dried up in recent weeks in the face of soaring interest rates.

The value of the £913m turnover firm has dropped by 10% after it said that profit for the year would come in at around two-thirds of the level expected after sales rates in recent weeks had halved.

Cooper said there was no “alarm” at the business, which still had a “very very strong” financial position.

However, he said: “As we look into next year, and start to think about the shape of the group, we’ll need to give careful consideration to the liquidity position if these sales rates, and this sales environment persists.

“We want to make sure we are looking at all cash commitments into next year and [be] thinking our way that through very carefully.”

In answer to a question, Cooper said that it was “sensible” to assume that net cash will fall to below £100m at the end of the firm’s financial year, which runs to the end of October. This compares to net cash of £277m at the same point last year.

Crest Nicholson, which until yesterday had been embarked on an expansion drive, yesterday announced a round of restructuring measures which will see its newly created East Anglia division merged into its neighbouring Eastern division, and growth slowed at the recently set up Yorkshire business.

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Crest said it will report adjusted pre-tax profit of £50m for the year, compared to the £73m previously guided.

Chief executive Peter Truscott also yesterday played down the prospects of significant further investment in land in the second half of the current financial year, given the purchase of sites in the first half. Truscott said the current reservation rate, of 0.25 sales per outlet per week, was around half of what he would normally expect at this time of year in a usual market, and that selling conditions were tougher in the south where prices were higher.

However, Truscott said Crest wasn’t anticipating having to make land writedowns, and added that Crest now expected interest rates to come down and provoke stronger housing market conditions in the “second half of 2024 and 2025”.