Crest Nicholson (CRST) CMD 2025 summary

Strategic priorities and market positioning

• Refocusing on the mid-premium housing segment, leveraging a strong brand and well-located land bank to target affluent, equity-rich buyers and downsizers, aiming for 10% market share in new build transactions in this segment over the medium term.

• Four strategic priorities: building exceptional quality homes efficiently, delivering outstanding customer service, operational and commercial excellence, and optimizing the land portfolio.

• Exiting large-scale PRS contracts and reducing affordable housing to regulatory minimums, shifting emphasis to higher-margin private development for sustainable shareholder returns.

• Land bank optimization and reduced exposure to PRS and affordable segments are central to the new approach, with selective divestment of large sites and prioritization of smaller, high-return locations.

• Roadmap aims for significant uplift in medium-term performance and shareholder value, positioning as a compelling investment due to structural housing undersupply and a clear, focused strategy.

Financial guidance and operational targets

• FY 2025 guidance unchanged, targeting mid single-digit CAGR in volumes, with completions to grow from c.1,900 in FY24 to 2,300+ by FY29.

• Gross margin targeted to rise from 14% in FY 2024 to 20%+ by FY 2029, with annual improvements of 100–150bps, EBIT margin expected to reach 13%+ and ROCE at or above 13% by FY 2029.

• Inventory reduction of around £200m planned, with land bank forward cover to be reduced from seven to four–five years, lowering inventory to £900–950m by FY29 despite a 20–25% volume increase.

• Overhead costs to be reduced from 9% to 7% of revenue by FY27, aligning with sector benchmarks.

• Dividend policy maintained at 2.5x cover from adjusted earnings, with capital allocation flexibility post-fire remediation.

Business transformation and operational improvements

• Product redesign to align with mid-premium expectations, including new house types, higher build specifications, and improved customer upgrade options.

• Enhanced build quality through standardized processes, better training, and stricter subcontractor management, resulting in improved customer satisfaction and reduced defects.

• Commercial controls strengthened, procurement diversified and centralized, and ERP systems upgraded for better management information and efficiency.

• Sales process overhauled, with new commission structures, improved customer journey, digital tools, and technology adoption to boost conversion rates and net achieved prices.

• Customer satisfaction score increased to 95.0% (2023: 87.3%), and open market sales rate rose to 0.61 in the first 10 weeks, driven by sales team upskilling and revised incentives.