Wednesday, February 28, 2024
UK

Homebuilders cut guidance, scrap dividend

China homebuilder

Henry Boot expects profitability for 2024 to be significantly below current market consensus of £37.2 million as it anticipates another difficult year ahead

UK homebuilders expect more headwinds this year despite an improving inflationary environment and stabilising interest rates, outlooks from Crest Nicholson Holdings, Henry Boot and Watkin Jones show.

Henry Boot expects profitability for 2024 to be significantly below current market consensus of £37.2 million as it anticipates another difficult year ahead, it said. The group is well positioned to benefit when our end markets recover. Nevertheless, we expect there will be a lag in performance because of the time it takes for projects and sales to complete, the firm said.

The homebuilder expects sales rates at its premium division, Stonebridge Homes, to continue improving, though it is conservative with estimates of completions for 2024 and forecasts that a recovery in residential sales will be more weighted to 2025.

Crest Nicholson reported “disappointing” revenue of £657.5 million, a 28% decline from a year earlier, citing ongoing weakness in the housing market.

Medium-term prospects for the sector remain positive given the structural under-supply of housing and the “encouraging” decline in mortgage rates, which has led to a rise in customer activity in spite of the seasonal lull, the firm said. Nevertheless the challenging planning environment is likely to slow volume growth in the sector, CEO Peter Truscott said.

Watkin Jones removed its final dividend, citing the uncertain market backdrop, after posting a full-year adjusted pretax loss that missed estimates of a modest profit. The developer also sees a “gradually” improving outlook supported by the continuing moderation in build-cost inflation.

This cautious outlook is shared across the homebuilding sector, though some firms are more optimistic. Taylor Wimpey said earlier this month it had seen “good levels” of inquiries so far in 2024, while Persimmon said its weekly sales rate increased in the last quarter of 2023, a sign that slowly dropping mortgage rates are relieving the pressure on homebuilders.

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