Crest Nicholson share price: 3 things we learnt from its half-year results

The British homebuilder delivered a strong performance as the sector continues to struggle against the political uncertainty created by Brexit.

Crest Nicholson Source: Bloomberg

Crest Nicholson has recorded a strong first six months of trading in what has been a challenging period for British homebuilders, which has forced many in the sector to revise their strategies by pausing growth and focusing on pre-sales and partnerships.

Crest Nicholson revised strategy reaps results

In its half-year results for the six months ending in April, Crest Nicholson saw its revenues increase 7% to £501.9 million, driven by a focus on forward looking sales which grew by 15% to £625.2 million.

However, the homebuilder has had to contend with downward pressure on margins, which have fallen by 270 basis points to 14.1%, with pre-tax profit down 11% to £64.4 million.

‘Our strategy to reduce forward sales risk through an increased proportion of pre-funded, presold homes has also realised a 15% increase in our total forward sales position,’ Crest Nicholson Interim CEO Chris Tinker said.

‘This increased certainty has traded an element of operating margin, which together with generally flat pricing and continuing build cost inflation, has contributed to a reduction in the operating margin,’ he added.

Dividend maintained despite slide in earnings

Basic earnings per ordinary share (EPS) for the company’s first six months stands at 20.2p, 12% lower than the same period a year ago.

Net cash used by operating activities in the first half of the year hit £25.6 million, down from £58.2 million, reflecting continued investment in Crest Nicholson’s investment in Chiltern and the Midlands.

However, despite the downward pressure on earnings, Crest Nicholson declared an interim dividend of 11.2p a share and remains committed to maintaining its full-year pay-out to shareholders.

Crest Nicholson expects strong second-half performance

The British homebuilder is confident about its performance in the latter half of the financial year, with the company boasting ‘encouraging forward sales’ due to an increased proportion of affordable homes coming to market in the months ahead.

‘Trading performance has been encouraging in the first half set against the uncertain and politically turbulent backdrop,’ Tinker said.

‘Business operations are proving resilient and operational efficiency initiatives are making planned progress.’


This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

See an opportunity to trade?

Go long or short on more than 16,000 markets with IG.

Trade CFDs on our award-winning platform, with low spreads on indices, shares, commodities and more.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
Bid
Offer
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Bid
Offer
Updated
Change
Bid
Offer
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
China 300
-
-
-
-

Prices above are subject to our website terms and agreements. All share prices are delayed by at least 20 minutes. Prices are indicative only.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.