By Samuel Indyk
Investing.com – Shares in UK homebuilding stocks were falling again on Thursday on what has been a difficult week for the sector.
Today’s losses come as Countryside Properties (LON:CSPC) shares tumbled by as much as 20% following a trading update that has seen the current chief executive officer leave with immediate effect.
The FTSE 250 component said trading in the first quarter of the new financial year was below the Board’s expectations.
Completions in Q1 dropped 36.8% to 809 from 1,280 in Q1 last year. Adjusted revenue in the first quarter fell 31.3% and adjusted operating profit declined 54.9%.
Alongside the announcement of the results, the homebuilder said the CEO Iain McPherson would be leaving the company with immediate effect.
“Iain McPherson has led Countryside through a challenging period, including the Covid pandemic and has clarified the Group's strategy, which is to focus all of our resources on our market-leading Partnerships business,” Countryside Properties Chair John Martin said. “I would like to thank Iain for his unwavering commitment and dedication to Countryside as leader of our business in the South and subsequently as Group CEO and to wish him every success in the future.”
The Board will now conduct a process to search for a successor and in the meantime, Martin will stand as interim CEO.
Persimmon update
Countryside was not the only homebuilder to provide a trading update and board changes on Thursday. The second-largest homebuilder, Persimmon (LON:PSN), has appointed Aviva 's (LON:AV) Jason Windsor as its new chief financial officer.
The FTSE 100 constituent also said full year home completions increased 7.2% to 14,551 with the average selling price increasing to £237,050. Persimmon added it expected 2021 underlying operating margin to be about 28%, 0.4 percentage points above the same period last year.
Cladding Fixes
The difficult week for homebuilders began when the UK government ordered the industry to devise a plan to fix the cladding crisis.
The UK Secretary of State for Levelling Up, Michael Gove, sent a letter, giving the industry a deadline of early March to come up with a fully-funded plan which must include remediating unsafe cladding on buildings between 11 and 18 metres tall. The fix is estimated to cost around £4 billion.
The government did not confirm which companies are in scope for funding contributions following discussions but they expect it to cover all firms with annual profits from housebuilding at or above £10 million.
Responding to the letter, Countryside Properties said they are “fully supportive” of finding an industry-wide solution for the benefit of leaseholders.
Persimmon confirmed it had already made a commitment to leaseholders in buildings constructed by themselves that they should not have to cover the cost of cladding removal, adding that they have only constructed a very small proportion of buildings affected by the issue.