The FTSE 250 group, which had previously forecast profits in a range of £35mln-45mln for the year to October 31, 2020, added that it would also reinstate the dividend with its next interim results.
Crest Nicholson said it has seen sales remain strong in the second half of its financial year and at levels slightly ahead of the pre-Spring lockdown.
Forward sales as at October 31, 2020, were 2,289 units worth £480.5mln compared to 2,013 units and £378mln a year earlier.
The builder’s portfolio is concentrated in Southern England and the commuter belt to major towns and cities, especially London.
In the trading update, Peter Truscott, Crest’s chief executive, said the introduction of another national lockdown ‘will undoubtedly bring fresh challenges’ but he welcomed the government’s support to maintain construction activity and that the housing market was allowed to stay open.
“Since the Spring lockdown we have traded well and as a result are pleased to announce an upgrade to earnings for the year. We also enter next year with a strong forward order book,” he added in the statement.
“Our disciplined focus on cash generation and capital allocation has ensured we close the year with an excellent cash position and a robust balance sheet. Accordingly, we are pleased to be reinstating our dividend in the next financial year.”
At the end of October 2020, Crest had net cash of £135mln against £37.2mln a year earlier, while a £300mln coronavirus credit facility from the government remains undrawn.
‘Reassuringly positive’ trading update
Broker Canaccord says the trading was reassuringly positive.
Lockdown came at a very inconvenient time for the new management team as they had just embarked on the implementation of their new strategy, said the broker, but this update indicates the builder is back on track.
“The promised reinstatement of the dividend is also welcome news for investors and reflects the stronger balance sheet and management confidence,” said Canaccord.
“Clearly, macro risks remain going into 2021 but the shares sit at a significant valuation discount to the sector and this update should reassure investors that the team is making good progress despite the impact of the pandemic.”
The added it keeps its ‘buy’ rating but has raised its price target to 290p.
Shares rose 18% to 257p.
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