A combination of the general election in December and the Covid-19 lockdown in March and April meant Crest Nicholson made a half-year loss of more than £50m.
For the six months ended 30th April 2020, Crest Nicholson saw its revenue drop by more than 50% to £240m (2019 H1: £502m) as the number of completed homes fell 35% to 775 (HY19: 1,187).
The bottom line was a pre-tax loss for the period of £51.2m (2019 H1: £64.4m profit) and net debt escalating 37% since this time last year to £93.3m.
With rationalisation required, 130 jobs are to go, out of a total headcount of 966 at the start of the financial year. It said that this would save £5m a year in overheads.
The first two months of the current financial year – November and December 2019 – saw “significant volatility and uncertainty associated with the run up to the general election” (which took place on 12th December). After the election, the outlook became bright, only to turn black again when the UK lockdown was introduced in late March.
Crest Nicholson furloughed 75% of employees from beginning of April under the government's job retention scheme (JRS), with all employees unfurloughed by 31st May 2020.
Plans to create a new division called Crest Nicholson Southern Counties (CNSC), announced in January, have now been put on hold. Its planned sites will be allocated to the other remaining divisions to ensure they are big enough to cope.
Chief executive Peter Truscott said: "Before lockdown the business was performing well and trading in line with our expectations. We were continuing to recognise further improvements to margin in our current developments and short-term land portfolio.
“However, we cannot ignore the risks that Covid-19 presents to the UK housing market even if we cannot predict with certainty what the impact of those risks will be. Therefore, we have adapted our strategy by deferring the planned opening of an additional division and targeting further reductions in overheads. Taking decisive action now will ensure Crest Nicholson is able to flourish in whatever market conditions may emerge in the future including if the market quickly returns to growth."