A collapse in land sale expectations driven by deteriorating buyer confidence has forced Crest Nicholson PLC (LSE:CRST), the southern England-focused housebuilder, to issue a severe profit warning, with shares falling 39% to 65.5p.
Jefferies said the group now guides full-year 2026 earnings before interest and tax (EBIT) to between £5 million and £15 million, implying cuts of between 66% and 89% to the latest company-compiled consensus figure of £43.7 million.
With interest costs guided at around £15 million, the bank said pretax profit is likely to be flat or negative for the year, against a prior consensus expectation of £33.5 million.
The primary trigger is a sharp reduction in expected land sales, now guided to £40 million against a previous range of £75 million to £100 million, as the uncertain macroeconomic backdrop has dampened buyer engagement and increased price sensitivity.
Management said it still believes the higher land sales figure could materialise, but that the pace of transactions is likely to be slower than previously assumed.
Beyond land sales, Crest Nicholson has also taken a more conservative view on completions, guiding to between 1,400 and 1,500 units for the full year, down from a prior range of 1,550 to 1,700, reflecting reduced new enquiries and visitor levels in the second half.
Jefferies estimated the loss of 150 to 200 units, assuming an average selling price of around £400,000 and margins of 15% to 20%, accounts for between £6 million and £12 million of the guided EBIT shortfall.
The group also flagged a further 1% to 2% of cost inflation on top of its prior expectation of 1% to 2%, adding further pressure to margins.
The deterioration in profit expectations means one of the group's three debt covenants, a 3x interest cover ratio, may be breached, and Crest Nicholson said it is in the early stages of seeking temporary covenant relaxation from its lenders.
Jefferies, which maintains a buy rating and a 164p price target on the shares, noted the group had previously flagged severe but plausible downside scenarios that could affect its going concern status, and said there is no guidance on the outlook beyond the current financial year.