Shares in Crest Nicholson have fallen by 40% after the housebuilder reduced its revenue guidance from a range of £75m to £100m to an expected £40m.

The firm said that since its trading update on 25 March, macro-uncertainty has increased, with the ongoing conflict in the Middle East “contributing to the prospect of a more prolonged higher interest rate environment, renewed cost pressures and a deterioration in consumer confidence”.

Crest Nicholson stated its open market reservations have continued in line with the improved levels seen since mid-January, and it has completed one land sale so far in the current financial year.

However, it said in recent weeks, there has been a “marked softening in sentiment” among prospective land purchasers and buyers have become more cautious in the face of the uncertain outlook.

As a result, the firm has reduced its revenue expectations and has stated that it doesn’t expect to make a “material level of profit on disposals” in the remainder of the financial year.

Furthermore, its earnings are set to total between £5m and £15m, with interest costs of around £15m.

Chief executive officer at Crest Nicholson, Martyn Clark, stated: "We remain committed to our strategy of positioning Crest Nicholson as a leading player in the mid-premium housing market and continue to make good progress on our Project Elevate transformation initiatives.

“However, it is increasingly clear that the current macroeconomic uncertainty is contributing to the prospect of a more prolonged higher interest rate environment, renewed cost pressures and a deterioration in consumer confidence.

“Therefore, in the near term the right and prudent course of action is to adapt quickly to the challenges presented by the current trading environment and focus on prioritising cash generation and optimising our balance sheet position. We are doing what needs to be done to navigate this uncertainty to best position the business to deliver the attractive medium-term opportunity."

Head of investment at interactive investor, Victoria Scholar, described the statement as a “very bleak update” for the housebuilder.

She concluded: Interest rate sensitivity among housebuilders means that the conflict’s inflationary impulse not only adds to significant build cost pressures from higher energy but also threatens the demand outlook as the higher-for-longer outlook for interest rates dampens mortgage affordability and softens demand for borrowing.

“Shares have taken a brutal hit today shedding around 40%, the biggest drop on record, reflecting the profit warning and deteriorating sales outlook.”

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