Homebuilder warns on profits as housing market alarm bells intensify
Shares in UK housebuilders have taken a fresh hit on the latest woes to hit the sector including a profit warning from a major player.
Crest Nicholson shares plunged almost 15% at the start of Monday’s trading after it slashed adjusted pre-tax profit expectations for the year to October by more than 40% to £50m.
The Chertsey-based firm, which has lost more than a quarter of its market value in the year to date, blamed slowing sales as buyers battle high interest rates and inflation.
Cost of living – latest: House prices falling at double seasonal rate
Larger rivals saw their stocks come under pressure too.
Taylor Wimpey, Barratt Developments, Berkeley and Persimmon were the biggest fallers on the FTSE 100, with declines of more than 3% seen.
The market reaction also followed a Rightmove report showing a sharp fall in asking prices due to the twin squeeze on consumers.
It said average asking prices fell by 1.9% over the past month, the biggest fall for August since 2018 and twice as steep as the typical summer holiday decline.
Rising mortgage costs caused sellers to lower their expectations of what they can get for their properties, the property website added.
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‘I’m cutting everything out just to survive’
Nationwide Building Society had reported earlier this month that annual property values had declined by 3.8% in July, the sharpest fall since July 2009.
Data from Moneyfacts showed the average two-year fixed residential mortgage rate stood at 6.76% on Friday.
The five-year rate stood at 6.24%. Both were unchanged from the previous day.
They are linked to the funding costs faced by lenders as the Bank of England raises its key interest rate to battle inflation.
Financial markets believe it still has work to do, with Bank rate currently forecast to peak next year at 6% from the current 5.25%.
For its part, Crest Nicholson said transaction levels across the industry had weakened further, particularly in recent weeks, as mortgage borrowing turned more expensive.
“The group does not therefore expect to see a material improvement in trading conditions before its year end at 31 October,” it said.
Weekly sales volumes over the seven weeks to 18 Aug were at half the level the company had anticipated for the second half of the financial year.
The company had posted a profit of £137.8m in its 2022 fiscal year.
Read more: Job vacancies and starting salaries ‘fall for first time this year’ amid rate rise hit
AJ Bell investment director Russ Mould said of the market reaction: “Weak house price data is hardly a surprise.
“Economic uncertainty is elevated, mortgage costs have gone through the roof and the Help to Buy scheme has come to an end.
“However, Crest Nicholson’s profit warning has laid bare the scale of the impact of a housing slowdown on the housebuilding sector.
“Sales of new homes have plunged alarmingly and, while not all developers in the space are created equal, the news, allied to Rightmove’s latest reading on the property market, has had a knock-on effect on share prices in the rest of the sector this morning.
“The £7,000 drop in the average asking price observed by Rightmove in the last month, allied to a big drop in transaction volumes, is the kind of statistic to make estate agents distinctly uneasy.”
He added: “The scale of Crest Nicholson’s warning may come as a shock to investors given it reported its first half results just a couple of months ago and this hints at the speed and scale of the deterioration in the market.
“The one compensation for shareholders is Crest Nicholson is at least sticking with its planned full year dividend payment for now. However, its gloomy update will have set the market on alert for further warnings from its industry peers.”
The co-founders of the Ben & Jerry’s ice cream brand are demanding the brand be given its independence back amid a long-running row with its current UK owner.
Ben Cohen and Jerry Greenfield have written an open letter demanding that it be “released” from its parent firm.
Mr Cohen told Sky News he would give back the money he received in the sale of the business to Unilever in 2000 if it meant the brand could be independent.
Ben & Jerry’s is set to spin off all its ice cream brands under The Magnum Ice Cream Company (TMICC) name in a deal set to be fully completed before the end of the year.
“You’re saying, would I give it back? Absolutely. If we could still have Ben and Jerry’s independent, any day”, he said.
“It seems like the board of Magnum has been Trumpified”, Mr Cohen told Sky News as he protested the “silencing” of Ben & Jerry’s social mission.
Money latest: My parents’ row with P&O Cruises was resolved by audio recording
The consumer goods firm Unilever has never enjoyed an easy relationship with Ben & Jerry’s – a brand known for its activism on many political and social issues.
As part of the original merger deal, an independent board was set up to protect the ice cream brand’s mission.
But a series of disputes have followed.
The most high-profile spat came in 2021 when the US brand took the decision not to sell ice cream in Israeli-occupied Palestinian territories on the grounds that sales would be “inconsistent” with its values.
Ben Cohen in London
Unilever responded by selling the business to its licensee in Israel.
The independent board is currently locked in a legal dispute with Unilever, claiming in March that its then-chief executive David Stever was improperly sacked.
Ben Cohen. File pic: AP
For its part, Unilever has always argued that it “reserved primary responsibility for financial and operational decisions” as owners of Ben & Jerry’s.
In another example of the frostiness between them, an ice cream flavour launched in support of Democrat presidential candidate Kamala Harris went down badly in London.
Ben & Jerry’s claimed Unilever had demanded it stop public criticism of Donald Trump.
Mr Cohen was one of seven people arrested during the Senate protest in May
Ben Cohen himself was arrested earlier this year over a protest in support of Gaza during a US Senate hearing.
He and Mr Greenfield intervened in the ownership row as TMICC briefed investors on their plans at a so-called capital markets day. They say the independent board and many consumers and employees “no longer support the trajectory on which it is set”.
Mr Cohen, who is attending the event to protest, said: “Ben & Jerry’s was founded on a simple but radical premise: that our business could thrive and make outstanding products whilst standing up for progressive values.
“We fought to ensure our social justice mission was protected by Unilever when the company was acquired, but over the past several years, this has been eroded, and the company’s voice has been muted.
“We won’t be silent anymore. Authenticity has always been at the very heart of what we do, and stripping this away risks destroying the very value of Ben & Jerry’s. We urge the board and potential investors to rethink the inclusion of Ben & Jerry’s in Magnum’s future makeup and establish a Free Ben & Jerry’s.”
The new ice cream division, which will also comprise other brands such as Wall’s, is based in the Netherlands and will have a primary stock market listing in Amsterdam.
A spokesperson for The Magnum Ice Cream Company told Sky News: “Ben & Jerry’s is a proud part of The Magnum Ice Cream Company and is not for sale.
“We remain committed to Ben & Jerry’s unique three-part mission – product, economic and social – and look forward to building on its success as an iconic, much-loved business.”
Unilever has also been contacted for comment.
The co-founders of the Ben & Jerry’s ice cream brand are demanding the brand is given its independence back amid a long-running row with its current UK owner.
Ben Cohen and Jerry Greenfield have written an open letter demanding that it be “released” from its parent firm.
Unilever bought Ben & Jerry’s in 2000 but is set to spin off all its ice cream brands under The Magnum Ice Cream Company (TMICC) name in a deal set to be fully completed before the end of the year.
The consumer goods firm has never enjoyed an easy relationship with Ben & Jerry’s – a brand known for its activism on many political and social issues.
Money latest: My parents’ row with P&O Cruises was resolved by audio recording
As part of the original merger deal, an independent board was set up to protect the ice cream brand’s mission.
But a series of disputes have followed.
The most high-profile spat came in 2021 when the US brand took the decision not to sell ice cream in Israeli-occupied Palestinian territories on the grounds that sales would be “inconsistent” with its values.
Unilever responded by selling the business to its licensee in Israel.
Ben Cohen. File pic: AP
The independent board is currently locked in a legal dispute with Unilever, claiming in March that its then-chief executive David Stever was improperly sacked.
For its part, Unilever has always argued that it “reserved primary responsibility for financial and operational decisions” as owners of Ben & Jerry’s.
In another example of the frostiness between them, an ice cream flavour launched in support of Democrat presidential candidate Kamala Harris went down badly in London.
Ben & Jerry’s claimed Unilever had demanded it stop public criticism of Donald Trump.
Ben Cohen himself was arrested earlier this year over a protest in support of Gaza during a US Senate hearing.
Mr Cohen was one of seven people arrested during the Senate protest in May
He and Mr Greenfield intervened in the ownership row as TMICC briefed investors on their plans at a so-called capital markets day. They say the independent board and many consumers and employees “no longer support the trajectory on which it is set”.
Mr Cohen, who is attending the event to protest, said: “Ben & Jerry’s was founded on a simple but radical premise: that our business could thrive and make outstanding products whilst standing up for progressive values.
“We fought to ensure our social justice mission was protected by Unilever when the company was acquired, but over the past several years, this has been eroded, and the company’s voice has been muted.
“We won’t be silent anymore. Authenticity has always been at the very heart of what we do, and stripping this away risks destroying the very value of Ben & Jerry’s. We urge the board and potential investors to rethink the inclusion of Ben & Jerry’s in Magnum’s future make-up and establish a Free Ben & Jerry’s.”
The new ice cream division, which will also comprise other brands such as Wall’s, is based in the Netherlands and will have a primary stock market listing in Amsterdam.
Unilever and TMICC have been contacted for comment.
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