McCarthy & Stone profit drops but revenue beats expectations

Retirement housebuilder McCarthy & Stone posted a drop in full-year profit on Tuesday even as revenue beat analysts’ expectations, amid increased build and incentive costs.

In the year ended 31 August, pre-tax profit nudged down 1% to £92.1m while underlying pre-tax profit fell 10% to £94.1m, mainly driven by the age and mix of units sold, increased incentive costs, build cost increases offset by pricing improvements, and some additional land renegotiation costs.

Meanwhile, revenue rose 4% to a new record of £660.9m, beating analysts’ expectations of £658.6m. Legal completions were broadly flat at 2,302 but the average selling price was 3% higher at £273,000.

As far as current trading is concerned, forward sales as at 10 November 2017 were up up 11% at £277m.

Chief executive officer Clive Fenton said: "We achieved a strong result in the second half of the year and delivered an improvement in both margins and volumes compared to the first half of FY17. Our full year completion volumes were in line with the prior year despite some headwinds as a result of the increased level of uncertainty in the secondary market and the expected lower number of first occupations. We delivered to market 49 high-quality new developments and maintained our exceptional build quality and levels of customer satisfaction.

"The group starts the new financial year with a strong forward order book and a robust balance sheet. We remain focused on delivering profitable growth and are on track to open circa 80 sales outlets and deliver more than 65 first occupations in FY18. We have sufficient land under control, much of which already has detailed planning consent, to deliver our strategic growth plan of building and selling more than 3,000 units per annum."

At 0815 GMT, the shares were up 3.6% to 152.50p.