Crest Nicholson performing strongly as high demand continues

22nd Mar 2022 07:44

(Sharecast News) - Crest Nicholson reported a "strong trading performance" since the start of its financial year in an update on Tuesday, amid "favourable" housing market conditions.

The FTSE 250 housebuilder, which was holding its annual general meeting later in the day, said its private sales-per-outlet-per-week (SPOW) rate over the last eight weeks was 0.98, compared to 0.80 at the end of the 2021 financial year.

As of 18 March, its order book was over 84% covered for 2022 revenue, up from 63% at its preliminary results in January.

"This represents a strong forward order position, providing good visibility and confidence in meeting our revenue targets for the current financial year," the board said in its statement.

"Input cost inflation is likely to increase because of rising energy costs and raw material supply disruption caused by the tragic conflict in Ukraine and is already starting to be seen.

"However, as illustrated during the Covid-19 pandemic, the group has demonstrated its effectiveness at managing its supply chain in turbulent times."

In addition, Crest Nicholson said it was also managing to successfully offset cost increases through sales price inflation.

The company added that its expansion plans were progressing "well".

"Having appointed the business leader for our new Yorkshire division we have also moved into our office in Leeds.

"We are now focused on establishing the new team who are actively pursuing several land opportunities.

"We have also identified a business leader for our East Anglia division who is expected to join in June."

An office location had been identified, and Crest Nicholson said it expected to be operational in the region in the second half of the year.

The group said it was also continuing to review and remediate "legacy buildings" in accordance with the operational and financial guidance it provided with its preliminary results in January.

Crest Nicholson said it was "actively participating" in ongoing dialogue with the government on the subject, via the Home Builders Federation, and would update the market on the outcome of any discussions as soon as it could.

"The current macro and geopolitical uncertainties will clearly present fresh challenges for housebuilders to navigate.

"However, the board remains confident about Crest Nicholson's medium-term prospects."

The board said demand for housing was still outstripping supply, adding that the company had a "clear growth strategy" to capitalise on such market conditions.

"Our operating model is highly efficient and is supported by a strong balance sheet, which will underpin growth in future earnings and provides resilience in times of uncertainty."

Crest Nicholson said it would announce its half-year results for the six months ending 30 April on 14 June.

At 0913 GMT, shares in Crest Nicholson Holdings were up 0.69% at 291p.