Housebuilder warns on profits as UK mood worsens

British housebuilder Crest Nicholson has warned that its annual profit will fall by a third as prices flatten on Brexit-hit consumer confidence and as the company’s new leadership embarks on changes to the business.

The profit warning came as new figures detailed UK consumer confidence slumped this month to the lowest level in six years.

Crest Nicholson, which builds houses and flats in London and across the southern half of England, said new chief executive Peter Truscott wants to develop more projects and rely less on land sales in the coming years.

Crest Nicholson now expects to make pre-tax profits of between £120m (€139m) and £130m (€151m) for the year — down as much as 32%.

Analysts had expected pre-tax profit of £152.9m (€177.4m) this year, and shares in the company tumbled as much as 11% in response.

Housebuilders, seen as among the businesses most vulnerable to a no-deal Brexit, have warned repeatedly of pressures from the uncertainty over the proposed departure from the EU.

Barratt this month reported a dip in values of homes sold while signs of weakening prices also chimed with warnings from Bellway.

UK house prices rose at the slowest pace in more than six years last month and Crest said it would trim the value of its older London sites by £10m (€11.6m).

Britain’s longest-running measure of consumer sentiment slipped back to its joint-lowest level since 2013 this month as Brexit uncertainty weighed again on households’ assessment of the economic outlook.

British consumers have generally remained upbeat since 2016’s referendum to leave the EU — partly offsetting weaker business investment — but in recent weeks morale appears to have softened, boding poorly for spending in the run-up to Christmas.

The GfK consumer sentiment dropped to minus-14 in October from minus-12 in September, a slightly bigger fall than economists had forecast. The index was last this low in August, and has not been lower since July 2013.

Separately, there were also signs that Brexit uncertainty has weighed on Britain’s commercial property market.

Some 62% of surveyors believe the market had entered a downturn in the three months to September, the most since 2015.

- Reuters