(Reuters) - British housebuilder Crest Nicholson Holdings Plc (CRST.L) blamed weak prices and rising costs as it reported a dip in operating margins on Tuesday and said the full-year figure would be at the bottom of an initial range.
Shares in the builder, which focuses on southern England has borne the brunt of a Brexit-driven drop in some property prices, were down 5.6 percent in response, the top loser on the UK mid cap index .FTMUKU.
Speaking to Reuters after its half-year results, Chief Executive Patrick Bergin said Crest would try and hold its full year operating margins at 18 percent, compared to initial guidance of 18-20 percent.
For the half year to April 30, margins fell to 17.2 percent from 19.1 percent a year earlier.
“A more challenging pricing environment, particularly at the higher end of the market, has resulted in operating margins coming under a bit of pressure,” Bergin said.
“While the new build housing market under 600,000 pounds ($804,000) is still in very good health, the higher priced property, strictly where they touch the second-hand market, it’s still a little more challenging to persuade the more discretionary buyers to make transactions.”
Still, Crest and larger rival Bellway, in separate releases, said demand for homes remained robust and reported rising sales.
Crest said it would invest in areas where housing affordability was greater as part of efforts to shore up performance, but gave no details.
The company, traditionally focused on homes at higher sales points, has been trying to cut its exposure to higher priced markets and in May closed its central London office.
Bellway, in a trading update on Tuesday, reiterated its full year operating margin forecast of 22 percent.
It builds properties from one-bedroom apartments to six bedroom family homes across Britain and said demand was most pronounced for affordably priced family homes nationwide, including in Scotland, Essex and the Midlands.
Many of Bellway’s sites reported modest, single digit price rises, although the rate of increase had moderated compared to last year, the company said.
House prices overall in Britain are rising much more slowly than before the 2016 referendum decision to take Britain out of the European Union, which hit consumer confidence and spending as a fall in the pound that followed that vote pushed up inflation. Residential properties in London have fallen by the most in almost a decade.
Crest said its operating profit rose just 1 percent in the first half to 81.4 million pounds, while revenue rose 13 percent to 473.88 million pounds. Forward sales stood at 568.2 million pounds at mid-June, 5 percent up on a year earlier, it said.
Reporting by Arathy S Nair in Bengaluru; editing by Patrick Graham and Susan Fenton