MJ Gleeson expects to report full-year profit in line with market expectations, underpinned by a robust performance from Gleeson Homes that offset previously announced delays to site sales in its land promotion arm.
After a poor update from peer Vistry earlier in the week, MJ Gleeson’s update today was remarkably optimistic in comparison.
Gleeson Homes completed 1,968 homes in the year to 30 June, up 9.8% on the prior year, boosted by its first partnership completions of 320 units and 301 private multi-unit sales.
The low-cost housebuilder secured five further partnership deals covering 254 homes in the second half, taking the year’s total to eight partnerships across 384 homes.
Net reservation rates averaged 0.77 per site per week across the year, up from 0.71, though the rate excluding multi-unit deals softened in the second half. The forward order book edged up to 848 plots.
The group ended the year with net debt of £2.6m and land creditors of £15.5m, and said it is taking a prudent approach to working capital and site acquisitions amid macro uncertainty.
Build cost inflation from the Middle East conflict has proved less severe than feared, but Gleeson warned that continued inflationary pressure, combined with regulatory and tax burdens on residential development, will likely restrict near-term margin recovery. This shouldn’t come as a surprise to the market.
Like all housebuilders, the challenges are external factors.
Despite Labour’s promise to help build 1.5 million homes, planning bottlenecks also mean MJ Gleeson will operate from slightly fewer sites in FY2027 than previously planned.
Graham Prothero, CEO of MJ Gleeson plc, commented: “Against the backdrop of a continuing subdued housing market and widely signalled caution in the land market, we delivered a robust operating result.”
“More importantly, this performance was achieved whilst also implementing an extensive operational restructuring in Gleeson Homes. Following the delivery of Project Transform, we enter the new financial year with Gleeson Homes in far better shape.
“We cannot predict when the housing market will recover, but we can be confident that, with a much stronger Homes business, delivering highly affordable, high-quality homes, and a Land division promoting an enviable portfolio, we are in good shape to leverage the market recovery when it materialises.”