1138 Tuesday 29 January 2019

The market reaction during reporting season is as predictably unpredictable as ever. This morning UK homebuilder Crest Nicholson delivered their report, and it was gloomy to say the least. Not only did full year profits for 2018 come up short, but in their own words, Crest Nicholson forecast a ‘difficult’ first half of 2019.

Margins for the firm fell from 20.3% to 16.7% last year, with pre-tax profit falling 15% to £176.4m, below the average analyst expectation of £177.64. Crest Nicholson did however manage to build 3% more homes last year and saw their average selling price rise 1.3% to £393,000.

As to be expected with most reports coming out, much of the blame for lagging performance and downbeat forecast was due to Brexit. The firm cited that uncertainty had caused a lack of demand and a drop in prices for their upper end properties and said in a statement “Persisting uncertainty about the political and economic direction of the country, largely Brexit related, appears to have inclined many discretionary purchasers to refrain from making a buying commitment”. Fluctuations in the GBP have also seen a rise in costs for the homebuilder.

Unsurprisingly as the market opened, shares in Crest Nicholson dropped by almost 4%. Then the market took a wild swing and at the time of publication, CRST.L has now shot up to +7.32% and is trading at 366.60.

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