Crest Nicholson shares slide to record low after UK homebuilder warns of annual loss

By Raechel Thankam Job

Sept 3 (Reuters) - Crest Nicholson warned on Thursday that it would swing to an annual operating loss, in the latest blow for the British homebuilder hurt by sliding sales, rising price competition and pressure over its debt covenants.

The update sent shares tumbling more than 13% to a record low in early trading.

The company now expects a full-year operating loss of around £10 million ($13.5 million), reversing its earlier forecast for a £5 million to £10 million profit for the year ending October 2026.

It is the latest in a string of downgrades from the builder, which said trading had been more subdued than expected over the summer, with affordability constraints and competitive pricing dragging on open market sales.

Its net open market sales rate fell to 0.35 over the last six weeks, down from 0.48 in the first half and 0.55 a year earlier.

Talks to amend its debt covenants are continuing, though it flagged some slippage in the timetable, without giving details.

In July, Crest said a waiver of its interest cover covenant had been extended to September 30, after earlier warning of a going concern risk.

Investec analyst Aynsley Lammin said the update left less confidence around the outcome of the bank talks.

"They've been trying to do all the right things, but the market backdrop... has made things a lot worse and more difficult," he said.

HOUSEBUILDER CUTS HOME COMPLETION TARGETS

UK homebuilders are facing what some analysts call one of the toughest markets in recent history, with political turmoil and energy-driven cost inflation following the Iran war adding to the strain.

The builder said build cost inflation remained in line with previous guidance of 3% to 4%, mostly on materials. But it cut its annual home completions target to between 1,350 and 1,400 units, from 1,400 to 1,500.

"While the trading backdrop has remained difficult through the summer, we are making tangible progress on the actions within our control," CEO Martyn Clark said.

The company expects year-end net debt of £70 million to £90 million, down from earlier guidance of £100 million to £120 million, helped by land disposals, cash optimisation and a fire remediation recovery.

($1 = £0.7412)

(Reporting by Raechel Thankam Job in Bengaluru; Editing by Mrigank Dhaniwala, Nivedita Bhattacharjee and Jan Harvey)