Crest Nicholson Cuts Forecasts and Seeks Covenant Relief Amid Economic Uncertainty

Crest Nicholson trims guidance and prioritises cash as uncertainty bites

Crest Nicholson has hit the brakes. In today’s trading update, the housebuilder flagged softer market conditions, cut its sales and land disposal targets, warned of higher build costs, and started talks to relax banking covenants. The tone is pragmatic – protect cash, shrink risk, and ride out a tougher backdrop.

For investors, the pivot matters. Earnings will be thinner this year, cash generation will be the focus, and balance sheet flexibility is now front and centre.

Key numbers from the trading update

Metric	Previous guidance	New guidance / Update
Completions (units) FY to Oct-26	1,550 to 1,700	1,400 to 1,500
Current order book (units)	Not disclosed	1,106
Land sales revenue FY	£75m to £100m	c. £40m
Profit on disposals	Not disclosed	Not expected to be material
EBIT (earnings before interest and tax)	Not disclosed	c. £5m to £15m
Interest costs	Not disclosed	c. £15m
Year-end net debt	Not disclosed	£100m to £120m
Fire remediation cash spend FY	Higher than this	£75m to £80m

Sales trends: steady reservations but fewer new enquiries

Open market reservations have held up in line with the improved levels seen since mid-January. That is a small positive. Regional performance is mixed: the Midlands, South-West and Eastern divisions are trading well, while the South remains soft.

Importantly, Crest Nicholson has not seen materially higher discounting, incentives, or cancellations. The heads-up is earlier in the funnel: fewer enquiries and lower site visitor numbers. If that persists, conversion could slow through the summer, which explains the cut to full-year volumes.

Land sales cool sharply as buyers step back

Crest Nicholson has completed only one land sale so far this financial year, and recent sentiment has weakened. Prospective land buyers are more cautious, engaging less in bids and pushing back on market pricing.

The company now expects c. £40m of land sale revenue for the year, down from £75m to £100m previously, and it does not expect a material profit contribution from disposals. That is a notable swing because land sales can be a helpful lever for both cash and profit in tougher markets.

Cash first: finished plots sell-down and tighter WIP

Management is prioritising cash and balance sheet strength. Two levers stand out:

• Accelerating the sell-down of finished plots, especially completed apartment schemes.
• Tightening WIP (work-in-progress) controls across developments to reduce capital tied up on site.

With year-end net debt now guided to £100m to £120m, these actions are about keeping headroom while the backdrop remains uncertain.

Covenant relaxation sought: what it means and why it matters

Given lower expected profitability, Crest Nicholson has begun early discussions with lenders to temporarily relax banking covenants. In plain English, covenants are financial guardrails – common ratios on interest cover, net debt to assets, or similar. When profits dip, these ratios can come under pressure.

Management says talks have commenced and it will update in due course. Early engagement is a sensible, low-drama move, but it is a reminder that FY26 will be tight. A successful reset would de-risk the year and reduce concerns about forced asset sales or capital raises. Terms not disclosed.

Costs and remediation: energy inflation and steady progress on fire safety

Higher energy costs are feeding into higher build costs for the rest of the year. That squeezes margin at a time when volumes are down and land sale profits are minimal.

On fire remediation, the provision remains unchanged. Crest Nicholson expects to start 80% of affected sites by the end of July – in line with Government targets – and now sees FY cash expenditure slightly lower at £75m to £80m. The company is also pursuing recovery prospects, which, if successful, could claw back some of this spend. Quantum and timing of any recoveries are not disclosed.

Earnings lens: thin EBIT and breakeven-like PBT

Guided EBIT of £5m to £15m versus interest costs of c. £15m implies profit before tax is likely around breakeven, depending on where EBIT lands within the range. That frames the drive to conserve cash, reduce finished stock, and seek covenant headroom.

Volumes are now expected at 1,400 to 1,500 units, with an order book of 1,106 units for this financial year. That gives decent visibility but leaves Crest Nicholson reliant on in-year reservations to bridge the gap, which is harder when enquiries are slowing.

Management’s read of the macro: higher-for-longer rates and softer confidence

The company links the tougher outlook to ongoing geopolitical tensions in the Middle East, the prospect of higher-for-longer interest rates, renewed cost pressures, and weakening consumer confidence. In short, a more stubbornly challenging backdrop through the balance of the financial year to October.

Against that, Crest Nicholson says it remains confident in its medium-term opportunity and continues to progress Project Elevate, its transformation programme. Specific milestones or savings are not disclosed in this update.

My take: prudent moves, but a tougher year ahead

• Positives: Reservations hold steady, discounting is contained for now, remediation provision is stable, and cash management is assertive. Early covenant talks are wise.
• Negatives: Lower volumes, weaker land sale market, rising build costs, and EBIT guided to a very slim range. Covenant relaxation requests can spook the market until agreed.
• Unknowns: Outcome and terms of covenant discussions, pace of apartment sell-downs without heavy incentives, and whether enquiry softness deepens into the summer.

What to watch next

• Covenant update – timing and terms of any relaxation.
• Weekly sales trends – especially enquiries and visitor levels into late spring and summer.
• Land market liquidity – can Crest Nicholson achieve the c. £40m target without deep discounts.
• Cost inflation – any further pressure from energy or materials that could chip away at margins.
• Fire remediation cash flow – progress against the £75m to £80m spend and any recovery wins.

Housekeeping and investor call

Management will host a conference call today, Tuesday, 21 April 2026, at 8.30am to discuss the update. Dial-in: United Kingdom (Local) +44 20 3936 299; Toll-Free +44 808 189 0158; Access code 393782. Dividend intentions are not disclosed in this announcement.

Bottom line

This is a reset to a conserve-and-prepare stance. Lower volumes, softer land proceeds and higher costs squeeze FY26 profitability, and covenant flexibility is now part of the plan. If management executes the cash actions and secures temporary covenant relief, Crest Nicholson should be positioned to benefit when demand and the land market normalise.