Profits collapsed at retirement housebuilder McCarthy & Stone today as it posted its full year results.
Profit before tax fell 37 per cent year on year to £58.1m, down from £92.1m in 2017, as the housebuilder blamed a rise in building costs, rising operating costs, as well as extra marketing to promote its latest homes.
Revenue inched upwards two per cent to £672m while basic earnings per share dropped dramatically by 38 per cent to 8.6p.
Net cash depleted from £31m for 2017 to £4m for this full-year.
McCarthy & Stone also paid out £2m to advisors as it embarks on a turnaround strategy following former boss Clive Fenton's departure in June after profits halved.
The new strategy is meant to deliver cost savings of £40m per year until 2021 as new chief executive John Tonkiss said: "Our focus now is on creating a more efficient business capable of delivering improved shareholder returns, while leveraging our longer term strategic opportunities.
"This includes increasing customer appeal by offering a broader choice of tenure options, as well as increased flexibility and affordable offerings."
Emma-Lou Montgomery, associate director from Fidelity Personal Investing’s share dealing service, said the latest profit slump "shows how frail and vulnerable retirement community builder McCarthy & Stone is when compared to the buoyant house builders attracting the first-time buyer market".
"A slow ‘used’ property market, made ever slower by the ready supply of new builds to cater for Help to Buy scheme buyers on the first rung of the property ladder, means McCarthy’s would-be customers are either failing to find buyers or simply opting to release equity and stay put," she added.
However, shares were stable as the company kept its 2018 dividend.
"Investors may reap the rewards of the proposed turnaround plan - as long as it happens sooner rather than late,” Montgomery said.