Proactive Investors - Crest Nicholson PLC (LON:CRST) shares were little moved on Tuesday as the housebuilder said its chief executive Peter Truscott is retiring after more than four years in charge, but following a pair of profit warnings, the latest coming last week.
The incoming CEO is Martyn Clark, who is currently the chief commercial officer at Permission, where he has been for nine years, and will "assume the role later in the year".
City analysts diverged on how they viewed the outlook for the FTSE 250 company.
At UBS, the view was that there seemed to be more confidence about the year ahead, with an order book that as of last Friday equates to 1,732 units and a gross development value of £435 million, with management commenting that 52% of full-year revenue is covered.
Prevailing build cost inflation has reduced further from mid-single-digit inflation and is expected to continue to moderate this year.
"Comments from management are encouraging noting falling mortgage rates have led to a pick up in customer activity and several PRS deals have been contracted for delivery over the next few years," the UBS analysts said, noting that trading conditions are expected to improve towards the second half given the strong pipeline of private rented sector.
At Peel Hunt (LON:PEEL), analysts stated that "Crest Nicholson expects trading to remain challenging throughout FY24, with buyer demand impacted by high (if falling) mortgage rates ... Detailed guidance on FY24 is somewhat lacking, but risks are skewed to the downside, in our view."
Past year
Profit before tax of £41.4 million for the year ended 31 October, when there was £64.9 million net cash on the balance sheet, as guided in its recent trading update, broker Liberum noted.
This follows the identification of a further £5.5 million of additional costs at Farnham and other legacy and low-margin sites following a comprehensive review.
The group has begun a thorough plan to improve commercial processes and controls to mitigate the risk of future cost overruns, while construction at Farnham is in its final stages.
As announced last week, a £13 million exceptional charge has been recorded for a legal claim that was recently received relating to fire damage of a low-rise apartment scheme in 2021, and while it had no cash impact for the past year it may have a cash impact thereafter.
Liberum noted that the total dividend for 2023 will be in line with the prior year at 17.0p but is expected to revert to the policy of 2.5 times cover for 2024.
Truscott was appointed in September 2019 when the shares were just below 400p.
Following a profit warning last August, the shares dwindled to multi-year lows below 160p in the autumn, underperforming the rest of the sector, which while not exactly thriving during the housing market wobbles of the past year and a half have been on the up in recent months.