UK housebuilder Crest Nicholson reinstates dividend

UK housebuilder Crest Nicholson has reinstated its dividend and said annual profits would hit the top end of analyst forecasts, sending its shares up almost 20 per cent.

The FTSE 250 company said on Tuesday that the government’s stamp duty holiday had helped the housing market to recover following lockdown earlier this year and that, as a result, pre-tax profits for the 12 months to the end of October would be at the top of its expected £35m to £45m range. Pre-tax profits were £103m in the previous financial year. 

Dividends, which had been suspended earlier this year, will be resumed in the first half of the current financial year.

Shares in the group were up 17 per cent to 255.8p in early London trading.

When the UK first went into lockdown in March, housebuilding was put on hold and sales ground to a halt. Crest Nicholson responded with a gloomy update in June, when it reported a £51m pre-tax loss in the first half of the year and forecast that house prices would fall.

England will start a second national lockdown lasting at least a month this week but the government has said that construction sites will be allowed to remain open and that property sales can still happen. 

Peter Truscott, Crest Nicholson chief executive, said that “the introduction of another national lockdown will undoubtedly bring fresh challenges, but we welcome the government's support to maintain construction activity and for the housing market to remain open for business”.

“Crest disappointed [in June]. This is them saying: we’re back on track,” said Aynsley Lammin, an analyst at Canaccord Genuity. Before Tuesday’s share price rally, the company had traded at a discount to other housebuilders on a price to net asset value basis.

Crest Nicholson increased its net cash holdings from £37.2m at October 31 last year to £135m on the same date this year. 

“£135m is a pretty good performance. And suddenly they are saying, ‘we’ll also pay a dividend’. The change in tone is reassuring,” said Mr Lammin.

“Almost all of the big housebuilders have now stated that they will at least look at reinstating dividends in 2021,” he added.