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Crest Nicholson scraps offsite target as part of new strategy
Crest Nicholson has scrapped its target on offsite manufacturing amid a sharp fall in group annual profits, Inside Housing can reveal.
The FTSE 250 housebuilding giant said today that modular building remains “some way from being a mature model that we can transition to”.
In 2018, the Surrey-based group said it was aiming to build around 15% of its homes using modular techniques by 2020.
However, a source close to the company told Inside Housing that these targets are “no longer applicable” as its new management unveiled a fresh strategy.
Peter Truscott, who took over as the firm’s chief executive last September, is attempting to stabilise the group by restructuring and cutting costs.
However in its results statement today, Crest Nicholson said that offsite remains an “important development” and that it will “continue to asses [offsite’s] relevance for our delivery model”.
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Despite huge investment in offsite by the likes of L&G and Ilke Homes, and some government backing, factory manufacturing of homes remains relatively niche. L&G and Ilke have both reported significant losses as they get to grips with start-up costs.
A number of large housing associations have shown backing for offsite. Places for People signed a £100m deal with Ilke last year and London-based L&Q has pledged to use offsite manufacturing on all schemes by 2025.
However, the majority have yet to use offsite in large volumes, with associations instead opting to use the method for pilot or trial projects.
Crest Nicholson added: “We will work closely with government to better understand and tackle the constraints to the wide and timely adoption of [offsite manufacturing] to supplement traditional ways of working.”
Crest Nicholson also blamed its focus on offsite manufacturing for losing pace with its competitors.
It came as the firm reported a 39% slide in statutory pre-tax profits to £102.7m in the year to 31 October 2019. Sales fell 2% to £1.09bn as it sold 2,912 homes – a 4% drop on the prior year.
Meanwhile, the house builder revealed that it is taking an £18.4m hit from work on buildings affected by post-Grenfell fire safety measures.
The firm recorded the exceptional charge in its full year to cover “potential liabilities” after a review of around 100 of its properties following updated guidance from government last year.
The house builder did not disclose how many buildings were found to be at risk, but said work was under way on “several properties” without giving further detail.
Crest Nicholson said the £18.4m was the “best estimate” of the costs but admitted it is a “complex calculation” with many factors at play.
The firm was forced to issue a profit warning last October partly due to rising fire safety costs.
