Shares in retirement housebuilder McCarthy & Stone plummeted 17 per cent in early trading after it issued a profit warning because of disappointing spring sales and weaker property prices.
The company is now forecasting operating profits of £65million to £85m, down from £96m a year earlier and below analyst expectations of £105.5m.
Share slump: Shares in retirement housebuilder McCarthy & Stone hit a record low, plummeting 17 per cent in early trading after it issued a profit warning
McCarthy & Stone also announced the retirement of chief executive Clive Fenton on August 31 and confirmed it has started the search for his successor.
Fenton said that he was stepping down as the company embarked on ‘a new strategy to carry it safely through the next five years and beyond’ as it grapples with a proposed ban on ground rents and tough market conditions.
He added: ‘Having reached the age of 60, it is right that I now stand aside at the end of our financial year to enable a new chief executive to be responsible for this journey.’
McCarthy & Stone said there had been a ‘noticeable decline’ in reservation rates since the first quarter with potential buyers exercising ‘more caution due to ongoing economic uncertainty, a slower secondary market and a softening of pricing, particularly in the South East’ amid economic uncertainty caused by Brexit.
It expects to sell between 2,100 and 2,300 homes this year, falling by up to nine per cent on its 2017 total of 2,302.
The Bournemouth based group’s forward order book, including legal completions, stands at £706m, up from £639m the previous year, but lower than it expected.
Chairman Paul Lester launched a strategy review in April and plans to update investors on the findings by September.
Plans so far include cost-cutting and aims to rein in rising build costs, with the group also slowing down house completions to focus on profit margins and improving its return on capital already deployed.
Building decline: The group expects to sell between 2,100 and 2,300 homes this year, falling by up to 9% on its 2017 total of 2,302
McCarthy & Stone’s stock price took a hefty blow last year; dropping eight per cent on December 21 after warning over a potential hit from a Government crackdown on unnecessary leaseholds and ground rent charges.
The stock has since remained under pressure.
Fellow housebuilder Crest Nicholson’s share price last month saw its share price tumble by over 12 per cent as property prices stall and rising costs continued to hamper margins.
The Chertsey-based housebuilding group admitted it was finding it ‘difficult’ to sell its most expensive homes, having already edged out of the inner London market to focus on increasingly popular, and sometimes cheaper, locations on the outskirts.
Following suit: Shares also fell across the wider housebuilding sector after McCarthy’s alert, with Persimmon , Taylor Wimpey , Barratt Developments and Berkeley all in the red
Building on fears concerning the state of Britain’s housing market, Crest Nicholson said that while it saw average selling prices increase by five per cent to £439,000 in the last six months, this marked a ‘peak level for the business.’
However, rival Persimmon reported ‘robust’ figures for the first three months of the year, with demand for new homes soaring.
The FTSE 100 firm reported total forward sales revenue, which includes completions, of £2.76billion – up eight per cent year-on-year.