"Rapidly falling consumer confidence and rising interest rates immediately translated into softer demand in the housing market"
In its results for the six months ending April 30 2023, Crest said that its adjusted pre-tax profit fell to £20.9m from HY 2022’s £52.5m, with revenue falling 22% against 2022’s half year to £282.7m, reflecting “the economic uncertainty and lower confidence in the housing market during the first half”.
During the period, home completions decreased from HY22’s 1,096 to 894, with the private average selling price lifting 5.9% to £433,000. Crest’s average sales outlets were at 48 against last year’s 58.
Its sales per outlet per week were 0.54 compared to HY22’s 0.72. Crest said the rate of the first 11 weeks of its trading year – 0.35 - illustrated the challenging environment of late 2022.
Crest highlighted that, in previous years, housebuilders had been able to counteract high inflation and rising construction costs with higher selling prices. However, the more "benign sales environment" made this impossible, impacting margin performance in the first half.
During the period, Crest’s adjusted operating profit margin fell from HY22’s 15% to 7.8%.
However, it added that it had “successfully navigated a difficult first half” while continuing to prepare for future growth. It had decided to remain active in the land market which, it said, had been the “right” decision.
The firm expects the trading environment in its second half to be “more stable and conducive to moving home” and anticipates full-year adjusted pre-tax profit to be in line with its published consensus of £73.7m, “despite the lower first-half contribution compared to the prior year”.
However, the housebuilder warned that if interest rates kept rising and remained elevated for a “sustained” period of time, this would once again impact demand and confidence.
Peter Truscott, Crest’s CEO, said: “We started our first half amidst the worst of the economic uncertainty arising from the September 2022 mini-budget. Rapidly falling consumer confidence and rising interest rates immediately translated into softer demand in the housing market.
"At the time we outlined that, with a package of sensible measures to restore economic stability and trust, the market would remain resilient and this has proven to be the case.”
