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Crest Nicholson : Homebuilder Crest lifts profit view, resumes dividend even as new lockdown looms

11/03/2020 | 05:35am

(Reuters) - British homebuilder Crest Nicholson said on Tuesday annual earnings would top market expectations and reinstated its dividend as the market recovered after the initial coronavirus lockdown, sending its shares soaring by 20%.

Homebuilders have been benefiting from pent-up demand, a shift to larger properties as Britons reassess housing needs at a time when a majority of them are working from home, and stamp duty breaks after the first lockdown, but a new stay-at-home order could dampen that boom.

"The introduction of another national lockdown will undoubtedly bring fresh challenges, but we welcome the government's support to maintain construction activity and for the housing market to remain open for business" Chief Executive Peter Truscott said.

The company said current sales rates were slightly ahead of the pre-Spring lockdown level, with forward sales by end of October at 2,289 units versus 2,013 units last year.

It now expects annual adjusted pretax profit to be significantly ahead of the market consensus of 37.9 million pounds and at the upper end of its previous outlook of between 35 million to 45 million pounds.

"The strength of its recent trading could reflect people moving out of central London in pursuit of more spacious accommodation and a decent garden," Russ Mould, investment director at AJ Bell said in a note.

Shares of the company, which topped the FTSE 250 midcap index in morning trade, were headed for their best-ever day with a 19% jump.

But even with that surge, they were at 259.5 pence a piece - a far cry from the 433.8 pence they traded at the end of December.

Crest, which builds houses and flats across the southern half of England and the Midlands, said it will reinstate a dividend effective from the interim 2021 results, on 2-1/2 times cover basis.

Having completed an internal reorganisation across its operating units and head office, Crest said it would deliver annualised overhead savings in excess of 15 million pounds.

(Reporting by Samantha Machado in Bengaluru; Editing by Shailesh Kuber and Emelia Sithole-Matarise)

By Samantha Machado

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