MJ Gleeson profits crumble as housebuilder’s dividend suffers

Housebuilder MJ Gleeson profits have been hammered by economic volatility and worsening consumer confidence.

In the year to the end of June, the group’s pre-tax profit fell by 43.2 per cent to £31.5million, while revenue slipped 12.1 per cent to £328.3million. 

Revenue fell 4.1 per cent at Gleeson Homes, which targets first-time buyers, to £320.8million, while Gleeson Land suffered a 80.7 per cent decline to £7.5million.

Falling profit: Housebuilder MJ Gleeson has posted a drop in full-year profit amid economic volatility

MJ Gleeson said the results were line with expectations, echoing ‘shifting buyer demographics’.

The group said economic uncertainty had continued to subdue the wider market during the summer.

For shareholders, the total dividend for the year to 30 June 2023 will be 14p, against 18p last year. 

Gleeson Homes sold 1,723 homes during the period, down from 2,000 last year. Average selling prices increased by 11.3 per cent to £186,200, up from £167,300 a year ago. Gross profit margin on homes sold came in at 27 per cent, down from 29 per cent in 2022. 

Rising interest rates and higher mortgage costs have put some buyers off getting on or moving up the property ladder. 

Gleeson Homes’ net reservation rate for the nine weeks to 1 September was 0.43 per site per week, compared with 0.54 over the same period last year. Meanwhile, cancellation rates of 0.10 per site per week were unchanged.

The firm added: ‘However, with a steadying mortgage market and the implementation of a range of sales and marketing initiatives, including the introduction of a shared ownership package, we anticipate an increase in our net reservation rates during the Autumn selling season.’

 It said: ‘We also continue to receive interest in multi-unit transactions, which would further strengthen sales.’

MJ Gleeson shares rose today and were up 0.79 per cent or 3.10p to 397.10p this morning, having fallen over 14 per cent in the last year.  

Graham Prothero, the group’s chief executive since 1 January, said: ‘I am pleased to report a robust performance despite the impact on buyer confidence as a result of current economic volatility. 

‘We maintained an acceptable sales rate, supported by our first multi-unit and investor sales. 

‘We were pleased to see growing levels of interest from purchasers who might previously have considered more expensive homes from other developers, but who are attracted by the combination of Gleeson’s affordable price points and high quality.’

The group said cutting staff levels and reducing nine regional management teams to six is expected to save the business £3.2million every year.

This post first appeared on Dailymail.co.uk