MJ Gleeson braces for government housebuilding push after ‘less buoyant’ sales

MJ Gleeson shares fell on Thursday after the group said its sales figures had been “steady but less vigorous than expected” over the past six months.

The housebuilder told investors it expects its full-year results to be in line with market forecasts, with annual operating profit for its housing division forecast to be around £30m.

The London-listed low-cost housebuilder said Gleeson Homes completed sales of 1,772 new homes, up 2.8 percent from the previous year.

Shares in the group fell 2.2 percent or 19.96 pence to 577.04 pence on Thursday, having risen more than 49 percent in the past year.

Chief Executive Graham Prothero said: ‘We have delivered a strong overall performance with Gleeson Homes exceeding expectations in what has been a challenging year.

‘We are making progress on our key strategic priority of significantly expanding our operations over the medium term.

‘Looking ahead, we anticipate an increase in demand for new homes as interest rates begin to decline and consumer confidence returns.’

Commenting on Labour’s plans for the housing market, Prothero said: “There is much to do to make aspiration a reality, but the determination we have seen since the election to get things done marks a welcome shift in approach.

‘Gleeson is ready to play its part in delivering much-needed affordable housing.’

Anthony Codling, managing director of equity research at RBC Capital Markets, said the “sun is likely to shine on Gleeson” as the new government focuses on increasing home ownership and the supply of affordable housing “because it is also focused on delivering affordable housing for both the regulated and open markets”.

He added: ‘Gleeson has delivered results in line with expectations this year and profits are likely to grow next year as it builds and sells more homes.

‘Gleeson is also likely to benefit from the expansion of the grey belt, which we believe will help it achieve its ambitions to double volumes in the medium term, helping Labour achieve its target of 1.5 million homes over the next 5 years.’

Gleeson Homes’ forward order book stood at 559 plots at the end of the reporting period, up from 665 plots a year ago.

The division commissioned 10 new construction sites, starting the new financial year with 79 sites, of which 62 were actively for sale.

The company’s board said it expects demand for new homes to strengthen through fiscal 2025 as interest rates begin to fall.

The company said Gleeson Land faced challenges in the planning system and sold four sites during the year.

The division was expected to post an operating profit of around £2m, below market forecasts, due to the postponement of a major sale to coincide with the general election.

On Wednesday, Crest Nicholson said it was willing to strike an improved £720m share purchase deal with larger rival Bellway if the latter makes a firm offer.

The combined group, if the deal goes ahead, would be worth around £4bn, joining FTSE 100 heavyweights Barratt, Berkeley, Vistry, Taylor Wimpey and Persimmon in terms of market capitalisation.

The Crest-Bellway deal would concentrate the homebuilding industry into an even smaller handful of very large companies than is currently seen.