Housebuilder MJ Gleeson sees ‘positive signs’ of recovery despite drop in profits

Sheffield-based Gleeson Homes, part of the MJ Gleeson Group, also sold less homes in the period, selling a total of 769, down from 894 at the same time last year.Operating profit for Gleeson Homes fell by 44 per cent to £10.2m, while Gleeson Land saw a 28.6 per cent drop to £1.0m.

Despite the falling figures, Graham Prothero, chief executive officer of MJ Gleeson, said the firm had seen “positive signs” that demand was recovering.

He said: "The results for the half year reflect a robust performance given conditions in the housing market during 2023. Gleeson Homes entered the second half of the year with a strong forward order book and we are seeing encouraging signs of recovery in reservation rates.

“Against the backdrop of improving mortgage rates, we are seeing positive signs of a recovery in demand. We expect this to continue into the seasonally busier selling period over the coming weeks and months.”

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The company said that it had experienced margin pressures arising from increased sales incentives, extended site durations and multi-unit sales.

It added that these issues had been worsened by additional costs on a number of older sights. The group said these costs were brought to light by new management teams put in place following its organisational restructuring, which the firm implemented last year.

Mr Prothero added: “The business has traded well in difficult conditions and is well-placed to capitalise on a recovery in the market and resume its exciting growth strategy.

“Whilst we expect that the market will improve over the coming months, supported by reductions in interest rates, the pace of recovery remains uncertain and we continue to maintain a cautious outlook.

“It also remains to be seen what impact the general election will have on the strength of recovery this year.”

Reported average selling prices fell by 0.8 per cent to £185,000, down from 186,400 for the same period last year.

The firm said the figure had fallen due to “discounts on multi-unit sales and changes in mix.”

Administrative expenses for the group reduced by 11.7 per cent to £24.8m, down from £28.1m. MJ Gleeson said this came as a result of its organisational restructure last year.

Net reservations during the period remained low for the firm at 0.41 per site per week, compared to 0.36 per site per week in the six months to 31 December 2022.

The group said it was “encouraged” that early signs of recovery in buyer confidence were emerging, with net reservations per site over the last five weeks up 9 per cent on the same period last year.

It added that it has entered the second half of the year with a “strong” forward order book of 586 plots.

Underlying net selling prices on open market sales also increased by 1.6 per cent during the period. The group said incentives and discounts had been at lower levels than anticipated.

The group also opened three new sites in the period, the same amount as the six months ending December 31 last year.