Profit warning issued by firm building 400 new homes at Gloucester Quays
By James Young | 1st November 2019
Shares in the company building 400 homes on land sandwiched between Gloucester Quays, Sainsbury's and the Sharpness Canal took a nosedive yesterday morning after it issued a profit warning.
Crest Nicholson announced to the London Stock Exchange that profits for the 2020 financial year would now be in the range of £120-130million, down from £153million.
The announcement was the first since the firm appointed a new leadership team, including new chief executive Peter Truscott, who joined on September 9.
That led to a change in the company's expectations for profit before tax for the current financial year ahead of the new leadership team conducting a review of the company.
Crest Nicholson's The Waterfront development at Gloucester Quays opened for sales in June with one and two bedroom apartments for sale between £190,000-£274,000.
The statement to the Stock Exchange said: "The new leadership team has conducted a thorough review of the Company's current strategy and operations.
"Peter and the team have identified significant opportunities to generate value for shareholders over the medium term.
"Crest Nicholson is a resilient business capable of building on its key strengths in the future."
In the current trading update, the firm said that sales had been volatile in some of its regional businesses driven largely by ongoing customer uncertainty caused by Brexit.
That has led to an adjustment in some of the carrying values of London sites to reflect market conditions of around £10million.
The leadership team have also reacted to Government guidance notes in respect of combustible materials in the wake of the Grenfell Tower tragedy.
As a result it is considered it appropriate to record an exceptional charge in the year of approximately £17m.
Looking ahead the statement said: "Whilst the political and economic backdrop remains uncertain, Crest Nicholson expects consumer confidence and open market sales rates to continue to be impacted.
"Given this trading outlook, coupled with a lower level of land sale contribution in the year, the Company anticipates FY2020 profit before tax excluding exceptional charges to be in the range of £110m-£120m.
"Thereafter it expects strong profit growth in FY2021 and beyond as the updated strategy starts to take full effect.
"The new leadership team are confident that the actions they have already begun to implement will position the business strongly for the future and look forward to updating the market in more detail with their first Preliminary Results announcement on 28th January 2020."
Peter Truscott, new Chief Executive of Crest Nicholson said: "Crest Nicholson is a great business, which builds high quality homes and communities for our customers and is well placed to deliver for shareholders.
"The Company's high-quality land portfolio with a strong South-East presence offers significant opportunity to generate value for shareholders and we have identified a number of opportunities that will enable us to strengthen shareholder returns over the medium term.
"We are taking decisive action to ensure the business moves further and faster to make the most of the opportunities in front of it.
"While current market conditions remain uncertain, the prospects for Crest Nicholson over the medium term remain highly attractive."
At the start of yesterday's trading, shares dropped by as much as seven per cent on hearing the news before recovering slightly throughout the day.
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