Crest Nicholson shares slump after profit warning
Shares in Crest Nicholson slumped this morning after the FTSE 250 housebuilder issued another profit warning as new chief executive Peter Truscott outlined a strategic overhaul of the business.
In a trading update this morning the developer said profit before tax, is expected to be between £120m to £130m for the year to 31 October, down as much as 32 per cent year on year.
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Crest Nicholson’s share price dropped seven per cent after the company issued its fourth profit warning in two years.
The company also said it will report a one-off charge of £17m in the year, due to new fire-safety regulations on completed buildings.
Profit before tax is expected to fall the following year to be between £110m to £120m in 2020, before returning to growth in 2021.
Truscott, who joined the firm in September, unveiled new proposals to steady the business such as reducing land sales and increasing the number of sales outlets.
Russ Mould, investment director at AJ Bell, said: “Profit warnings often come in the early stages of a new chief executive’s tenure if they have done a review of the business and found unsatisfactory practices.
“You often have to wait up to six months for a review to be completed, so to have a profit warning only seven weeks after Truscott joined would imply that the strategic challenges were glaringly obvious and needed addressing immediately.”
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Truscott said: “We are taking decisive action to ensure the business moves further and faster to make the most of the opportunities in front of it. While current market conditions remain uncertain, the prospects for Crest Nicholson over the medium term remain highly attractive.”