Housebuilders drag on FTSE 100 after disappointing Crest Nicholson results
The company reported a 2% drop in pre-tax profits.
A drop in profits at Crest Nicholson sparked a sell-off in housebuilding stocks on Tuesday, pushing the FTSE 100 into the red.
London’s blue chip index ended the day down 0.4% or 33.62 points at 7,703.81 points.
Property developers and home builders were among the worst performers, with Barratt Developments falling 18p to 561p, Berkeley Group Holdings down 119p to 4,186p, and Persimmon dropping 70p to 2,790p.
It was sparked by disappointing results from Crest Nicholson, which reported a 2% fall in half-year pre-tax profits to £74.8 million.
The group said margins would also remain under pressure next year, as sales of higher-priced properties are set to continue falling.
David Madden, a market analyst at CMC Markets UK, said: “A jump in building costs were cited for the drop in profit, but the home builder confirmed that costs are stabilising.
“Operating margins declined from 19.1% to 17.2%, and the company anticipates full-year operating margin to be roughly 18% – at the lower end of the latest guidance.
“The share price reached a record high in May 2017, but has been in decline since then, and if the bearish trend continues it could target 400p.”
The FTSE 250-listed housebuilder ended the day down more than 4% or 18.2p at 428p.
Sector peer Bellway tumbled 122p to 3,287p after highlighting signs of a faltering British property market, having confirmed cooling price growth.
The Newcastle-based house-builder said that, while pricing was generally “firm”, the rate of growth had eased back in 2018.
Across Europe, the French Cac 40 closed lower by nearly 0.4% while the German Dax was flat.
In currency markets, the pound received a late-afternoon boost as Parliament continued to vote on amendments to the EU Withdrawal Bill.
Sterling was up 0.3% against the US dollar at 1.341 and rose 0.3% versus the euro to 1.138.
Investors were also digesting jobs data which showed the unemployment rate holding steady at 4.2%, though average earnings increased by 2.5% in the year to April, down by 0.1% on the previous month.
Brent crude prices were flat at 76.44 US dollars per barrel, with investors pausing ahead of an OPEC meeting to be held in Vienna later this month.
In UK stocks, British American Tobacco fell 66.5p at 3,680p as the Lucky Strike and Dunhill maker warned that foreign exchange rates could impact operating profits by 8% for the first half and 6% for the full year.
However, the company insisted it would still deliver solid full-year earnings growth.
Away from the top tier, Dominos was the worst performer on the FTSE 250, falling 23.9p to 361.4p after announcing the departure of its chief financial officer Rachel Osborne. It has launched a hunt for her replacement.
Shares in retailer Ted Baker slumped 40p to 2,346p. While the company reported a 4.2% rise in group sales over the 19 weeks to June 9, the company noted that it was still facing an “uncertain consumer outlook”.
Investors also ditched Boohoo.com shares, which fell 2.1p to 218p, despite a 53% jump in first quarter sales to £183.6 million.
The biggest risers on the FTSE 100 were Mediclinic International up 21.8p at 565.4p, Centrica up 5.4p at 150p, Evraz up 14.8p at 551.8p, and Kingfisher up 8.1p at 312.8p.
The biggest fallers on the FTSE 100 were Anglo American down 60.6p at 1,812.6p, Barratt Developments down 18p at 561p, Berkeley Group Holdings down 119p at 4,186p, and Persimmon down 70p at 2,790p.