Housebuilder Crest Nicholson’s shares fall – despite rebuffing Brexit blues
Nothing can dampen the profits of a housebuilder, not even Brexit – housebuilder Crest Nicholson this morning posted healthy results despite the uncertainty about the outcome of the UK's upcoming referendum.
The figures
In its half-year report this morning, Crest Nicholson announced pre-tax profits at the firm were up 26 per cent in the six months to April, to £58.9m.
Revenue was up by 22 per cent, from £333.2m in 2015 to £408.1m in 2016. Forward sales were up by nearly 20 per cent to £520.8m.
The firm hiked its interim dividend to 9.1p per share, up from 6.4p at the same point last year and said it is "well positioned" to make its target of £1bn of revenues in 2016.
Shares were down 1.9 per cent at 549p in early trading.
Why it's interesting
Chancellor George Osborne has predicted house prices will crumble in the event of Brexit, but housebuilders remain unphased. Crest Nicholson's results today reflect the confidence voiced by others in the industry that, even if the UK leaves the EU, as long as people need houses, there's good business for housebuilders.
Prime central London property has been faltering, with international investors holding off until the outcome of the referendum is known – but there is still plenty of demand in the middle of the market. Experts predict any impact of the referendum on the market at the moment is only temporary.
Crest Nicholson this morning said they are increasing their offering in the private rented sector; landlords in particular have far more to worry about than Brexit, namely the various tax changes that have been introduced by Osborne to favour first-time buyers.
Anthony Codling, equity analyst at Jeffries International, said: "The group does note the risk of business disruption in the event of a vote to leave the EU. However, in our view, in the event of an exit, we would expect a contraction of supply in the second-hand market, which would accentuate the attractions of the Help to Buy fuelled new-build sector tempering the impact of an exit on Crest’s results."
What Crest Nicholson said
Stephen Stone, chief executive, said:
Whilst the debate about the forthcoming referendum on UK membership of the European Union continues to dominate the headlines and the board notes the risk of business disruption in the event of a vote to leave, purchaser demand for new homes remains strong and Crest Nicholson has delivered a nine per cent increase in open market completions in the first half of this year.