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Investing.com -- Shares of Crest Nicholson (LON:CRST) tumbled 5.2% as the homebuilder provided a cautious outlook for FY25, with guidance on completions, adjusted profit before tax (PBT), and net debt that did not fully align with market expectations.
The company is guiding to total completions of 1,700-1,900 homes in FY25, which is in line with the Visible Alpha consensus of 1,835. However, Crest Nicholson anticipates adjusted PBT for FY25 to be in the range of £28m to £38m, with a midpoint of £33m, slightly below the consensus estimate of £34.5m. Additionally, the forecasted net debt range of £40m-£90m was communicated.
Crest Nicholson reported home completions (excluding joint ventures) of 1,873 for the year, a decrease of 7.3% YoY and just above the consensus of 1,866. The average selling price (ASP) on open market sales remained relatively stable YoY at £344k.
The company also addressed build costs, with the year-end remediation charge standing at £249m, which is within the previously guided range and is expected to be funded through cash flow and the balance sheet. This is part of the company’s plan to complete the remediation programme by 2029, aimed at resolving legacy fire-related liabilities.
Adjusted PBT for the year came in at £22.4m, meeting the company’s guidance towards the lower end of the £22m-£29m range and aligning with consensus projections of £22.7m. However, the total FY24 dividend was announced at 2.2p, which fell short of the consensus expectations of 2.7p.
The company’s recent trading showed incremental improvements in sales performance, though the rate environment continues to impact the housing market recovery. Crest Nicholson expects greater market stabilization during the second half of FY25. Looking ahead, the group sees some positive momentum in average selling prices as it enters FY25, despite anticipating a slight reduction in sales outlets due to planning delays.
In light of the guidance and recent performance, RBC commented, "While the guidance midpoint is lower than consensus, we welcome the reiteration of fire safety remediation after an audited review, and the news of a strategy update in March."
Crest Nicholson plans to provide an update on its medium-term strategic focuses and goals in March 2025, following a review of the business by new CEO Martyn Clark. Investors appear to be digesting the mix of cautious guidance and the company’s commitment to addressing its legacy issues as they weigh the potential for recovery in the housing market.
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