Crest Nicholson has announced that its pre-tax profits for the year ending October 31 2018 slipped 15% to £176.4 million, with the London sales and higher priced homes being the main challenges in the year. Revenue was up 9% to £1,136.1 million and unit sales up 3% to 3,020.
“The business has had a good year operationally, with an increase in the number of new homes delivered. However, we have faced some challenges in London and with sales at higher price points where political and economic uncertainty has adversely impacted customer demand and this is likely to continue pending Brexit resolution,” said Crest Nicholson CEO Patrick Bergin.
“Our forward sales are strong, boosted by our strategic partnerships and our new channels to market. Pricing is stable, build cost inflation has moderated and we have implemented plans to mitigate margin pressure, which will take effect progressively over the next few years. Our revised business strategy and focus on cash generation underpins our confidence in generating sustainable shareholder returns,” he added.
In order to offset build cost pressures, Crest has taken a number of actions in its supply chain, as well as making improvements to build quality management and performance and investing to improve operational efficiency. The firm has developed a new range of designs for both houses and apartments which offer cost efficiencies through “some standardisation” making procurement and construction easier.
The firm is also expanding its use of offsite manufacture (OSM), where house components, typically pre-insulated cold-rolled steel frames, are built in a factory and then erected on site.
Looking ahead Bergin said that in the context of an unresolved Brexit, he expects the first half of 2019 to be difficult but that Crest is equipped to deal with any challenges it faces.
“We are optimistic about the longer term prospects of the sector, we continue to remain vigilant and responsive. Our focus on the south of England housing markets remains a long-term strength, land remains in good supply and we have strong plans in place to meet the demand for affordable housing,” concluded Mr Bergin.