It’s tough out there for housebuilders, and MJ Gleeson has demonstrated that rising revenues and completions aren’t enough to ensure sustainable profit growth.
MJ Gleeson reported annual results broadly in line with revised expectations, with housing completions rising to 1,793 homes sold compared to 1,772 the previous year.
However, profits declined as operating profit at the homes division fell 26% to £22.3m despite a 6% revenue increase to £348.2m.
The housebuilder’s gross profit margin on homes sold dropped to 20.7% from 24.1% the previous year. Group profit before tax fell 17% to £20.5m, though total revenue increased 6% to £365.8m. The group pointed to rising costs as olders sites incurred higher costs and extended site life increased overheads.
Gleeson Land performed strongly, with operating profit surging 218% to £7.0m from £2.2m. The division completed seven land transactions versus four previously.
There are some reasons to be positive. Net reservation rates have improved 8% in recent weeks to 0.54 per site per week.
The firm maintains ambitious plans to sell 3,000 homes annually, which could triple group profitability. These ambitions, coupled with a dividend maintained at 11p for the full year, will have helped provide some support for shares on Tuesday.
“This year has been challenging for Gleeson, and despite selling more homes relative to FY2024, there have been factors which stalled our momentum. We have taken the actions necessary to benefit the business through FY2026 and ensure the delivery of our strategic objectives,” said Graham Prothero, CEO of MJ Gleeson.
“Positively, Gleeson Homes significantly strengthened its forward order book in the year. Market demand has been steady, and we have maintained a robust sales rate, reflected in our net open market reservations rate, up 28% in the second half against the same period last year. Selling prices, however, remained constrained, with incentives continuing at an elevated level, restricting material margin improvement.”