The boss of the struggling housebuilder Crest Nicholson is stepping down after it revealed its profits have plummeted by 70% in a year amid runaway costs and a slump in the number of property completions.
Peter Truscott will be replaced as chief executive by Martyn Clark, now chief commercial officer at rival Persimmon, later this year.
After three profit warnings in the past six months – the most recent a week ago – Crest reported a 70% decline in adjusted profits before tax to £41.4m in the 12 months to 31 October.
It completed 2,020 new homes, down about a quarter from 2,734 the year before, leading to a 28% drop in revenue to £657.5m. It blamed the weakness in the housing market. Truscott said the company was aiming to build 1,800 to 2,000 homes this year.
Profits were adversely affected by additional costs of £5.5m at the Brightwells Yard site in Farnham and other sites. The Farnham project has been delayed because of a series of planning, legal and construction problems.
The company took a further charge of £11.3m for internal and external works on older buildings to rectify fire safety defects after the devastating Grenfell Tower fire in 2017 caused by combustive cladding. Crest’s total provision has risen to £144.8m from £140.8m. Builders have been forced to join the government’s developer remediation contract committing them to rectify unsafe buildings.
Separately, Crest booked a charge of £13m for a legal claim it has recently received, relating to a low-rise apartment block built by the group near Reading in 2019 that was damaged by fire in 2021.
Truscott described the results as “disappointing”, but added: “Recently there has been some positive macro trends with inflation and mortgage rates falling, which bode well for the housing sector.
“Although it is too early to gauge customer behaviour, we have been encouraged by an increase in customer interest levels and inquiries this calendar year. However, we remain mindful of ongoing uncertainties within the broader economy.”
He said hurdles in the planning system would leader to slower housebuilding volumes across the sector.
Andy Murphy, an analyst at Edison Group, said: “The announcement of CEO Peter Truscott’s retirement and the appointment of Martyn Clark signals a crucial leadership transition.
“Clark brings extensive industry experience, and his role becomes crucial in steering the company’s strategic recovery, controlling costs, and sustaining growth. Investors will closely watch how the leadership change contributes to Crest Nicholson’s efforts to overcome the recent operational and financial challenges.”
Other housebuilders have also reported sharp declines in home completions. Persimmon built 9,922 homes last year, down by a third from the 14,868 in 2022. However, its fourth quarter was stronger as mortgage lenders cut their rates amid a fierce price war. Looking ahead, the housebuilder said market conditions remained highly uncertain, particularly for first-time buyers.
Taylor Wimpey also built fewer homes last year – 10,848 compared with 14,154 in 2022 – but raised its average selling price by 5.1% to £370,000.
