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Crest Nicholson's profit rises on strong home buyer demand
June 17, 2014 / 6:37 AM / 3 years ago

Crest Nicholson's profit rises on strong home buyer demand

LONDON (Reuters) - British housebuilder Crest Nicholson said first-half profit before exceptional items rose 37 percent, reflecting “very strong” demand.

The company reported pretax profit of 38.4 million pounds ($64.5 million) on revenue up 26 percent to 241.1 million pounds for the six months to April 30, and said it was confident about its prospects for the rest of the year.

Chief Executive Stephen Stone said legal completions in the half rose 35 percent to 1,091, and sales per outlet were up 8 percent to 0.83 a week.

“From a land pipeline we are still seeing very good opportunities,” he said in an interview on Tuesday.

Stone said the company had been buying land in “very good locations” in highly sought-after southeast England - in areas such as Marlow, Cambridge, Putney, and West Wycombe - which would lead to an increase in average sales prices.

Shares in the group, which along with its peers fell on Friday after the Bank of England signaled it could intervene to cool the housing market, were trading up 3 percent at 334.6 pence at 0747 GMT (0847 BST).

The housing market itself showed no signs of slowing in data released on Tuesday. British house prices rose 9.9 percent in April from a year earlier, their biggest annual rise since June 2010, the country’s Office for National Statistics said.

London saw an 18.7 percent year-on-year rise in April, it added.

Barclays analyst Jon Bell, who has an “overweight” rating on the stock, said the company’s strong interim results and a positive outlook allowed him to upgrade his pretax profit forecasts by 9 percent, 16 percent and 22 percent respectively , in the next three years.

He said Crest Nicholson had a “highly supportive backdrop”. “Despite weak stock market sentiment and fears of interest rate rises, core house building fundamentals remain strong in the south of England,” he said.

Crest Builds most of its homes in southern England, from the county of Kent in the east to Somerset in the west.

($1 = 0.5956 British Pounds)

Editing by Kate Holton

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