Cladding costs send Crest Nicholson tumbling into red for half year

The cost of fixing buildings with fire safety defects has sent Crest Nicholson tumbling into the red with the housebuilder racking up an interim pre-tax loss of more than £50m in the first half.

The interim results were hit by a £105m one-off cost to fix buildings with fire safety defects under the developer pledge the firm agreed with government. Crest had previously estimated the bill for remediating its blocks over 11m in height would be between £80m and £120m.

As a result, the firm filed a pre-tax loss of £52.5m in the six months to 30 April compared with a £36.3m pre-tax profit for the same period last year. Turnover was up 12% to £364m.

Despite the loss, Crest said it has upgraded its expected adjusted profit before tax for the full year to between £135m to £140m. This figure excludes the one-off costs for building safety.

The housebuilder increased its forward sales for the half-year from 2,771 to 2,891 year-on-year.

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It said: “Despite the resumption of stamp duty, following its suspension during covid-19, demand for housing has remained strong in the first half.

“A lack of supply, plentiful mortgage availability and issuance and ongoing changes to the balance of home and office working patterns have all supported this backdrop.”

The loss for the first half of the year means Crest Nicholson’s return to profit after a difficult few years has been short lived.

In January, the housebuilder reported a pre-tax profit of £86.9m in the year to 31 October compared with a £13.5m loss the previous year.

It restructured following a string of profit warnings before the pandemic and in 2020 announced redundancies as it slumped into the red.