Crest Nicholson has warned that its profit margins on flat housing prices and rising business costs, prompting investors to send shares down 13pc developer.
The company says that although he had “strong revenue growth and housing unit numbers in the first half of 2018… as a rule, fixed prices due to the ongoing build costs for 3-4pcs will mean that the Operating margin for the full year is expected to about 18pc”. That is, in the lower part of the crest Nicholson 18pc to 20pc of the guided range.
Average prices, sales grew 5pc to £439,000 in the first half of the year, and the developer expects revenue growth of more than 15pcs this year, with the beginning of the year prior to the date of completion of 11pc ahead of the same period last year.
The company reported that sales at higher price points turned out to be “difficult to achieve”, which it said “reflects the increasing interdependence of the higher cost of sales from transactions on the secondary market, where activity has been more muted and property chains taking more time.”
This developer expects that this trend will continue, he said, would suppress prices and the reasons for its fields must be equal.
Crest Nicholson stated that the volume in the housing market continue to be “generally reliable” in its core operating areas and new home buyers can be assisted by strong levels of employment and the combination of low interest rates and access to mortgages.
Patrick Bergin, crest Nicholson, Executive Director, said: “flat pricing has a negative impact on margins, but the volume of new housing construction market continues to be a reliable and crest Nicholson are still good opportunities for growth and deliver the homes that Britain needs while continuing to focus on achieving high returns for shareholders”.
But analysts suggested that the company did not respond to changes in the market.
Anthony Codling, an analyst at Jeffrey, said: “we think that they are more focused on volume than to optimize profits. Unfortunately, because of the shift in market conditions, while their product may be in the right place, without scattering at the best price, in our view”.
Shares in crest Nicholson plunged 13.33 PC to update to 428p in mid-morning trading. Rival builders also took a knock, with shares translation of the English word down 2.9 PC and Barratt developments falling 1.37 PC.