In a trading update, the housebuilder said this year’s profit before tax is expected to be between £120mln and £130mln, dropping to between £110mln and £120mln in 2020 excluding exceptional charges, with “strong” growth thereafter.
This year’s accounts will factor in an extra £17mln expense to replace combustible materials as the government tightened regulations after the Grenfell Tower fire, the group said.
It added that a 33p dividend will still be paid next year, provided “the business does not see a significant deterioration in trading conditions”.
Following the appointment of Peter Truscott as its chief executive last month, Crest's management has undertaken a business review and plan “a material and sustainable” cut to overhead costs, which analysts say are 6% against a 3%-4% average among its peers.
The company also said land sales will be limited to non-core and surplus assets, while it writes down £10mln on London properties due to customer uncertainty over Brexit and the UK economic outlook.
Too much focus on Brexit
“[It] is a shock and should be a red flag for all housebuilders still operating in London,” analysts at broker Shore Capital said in a note to clients.
“We have talked about the risk of earnings shocks and surprises being under-estimated in the sector and that there is too much focus on what goodies Brexit will deliver. This update shows that there is still plenty to be worried about before we get there,” they added
Crest shares dropped 8% to 377.4p in early morning trading.