Crest Nicholson swings to a loss in H1 as COVID-19 disrupts operations

Crest Nicholson (LON: CRST) swung to a pre-tax loss in the first half (H1) of the current financial year. On Wednesday, the company forecast a 60% to 70% decline in its annual adjusted pre-tax profit. Nicholson attributed the dovish estimate to the Coronavirus pandemic that has disrupted its operations.

Shares of the company were about 6% down in premarket trading on Wednesday and dropped another 5% on market open. At 223 pence per share, Crest Nicholson is now a little under 50% down year to date in the stock market after recovering from a low of 165 pence per share in early April. Learn more about the financial analysis of the company.

Nicholson forecasts £35 to £45 million in annual adjusted pre-tax profit

The British homebuilder said that its full-year adjusted pre-tax profit is likely to fall in the range of £35 million to £45 million that marks a steep decline as compared to £121.1 million that it recorded last year.

In terms of revenue, the company posted an about 50% decline to £240 million in the first half. In separate news, Nicholson’s competitor, Persimmon Plc, named Dean Finch as its new CEO to replace David Jenkinson. Finch has previously served as the CEO of National Express.

CEO Peter Truscott of Crest Nicholson commented on the report on Wednesday and said:

“We cannot ignore the risks that COVID-19 presents to the UK housing market even if we cannot predict with certainty what the impact of those risks will be. Therefore, we have adapted our strategy by deferring the planned opening of an additional division and targeting further reductions in overheads.”

Nicholson received £300 million aid from the British government

In a bid to shore up finances amidst the ongoing health crisis, Nicholson has furloughed roughly 75% of its workforce and suspended its dividend. The Chertsey-headquartered company also received £300 million aid from the British government.

At £51.2 million, Crest Nicholson’s pre-tax loss in H1 came in significantly higher than £64.4 million profit in the comparable period of last year. In the second half, however, the housebuilding firm expects to perform significantly better than the first half.

Crest Nicholson performed fairly upbeat in the stock market last year with an annual gain of more than 30%. At the time of writing, the British housebuilder has a market cap of £569.34 million and a price to earnings ratio of 6.91.