MJ Gleeson aims to ‘triple’ profits by building 3,000 new homes a year

MJ Gleeson could see its profitability “triple” as it aims to build 3,000 new homes a year, the housebuilder has said.

The group, whose revenue rose 5.2 per cent to £345.3m in the 12 months to June 30, is preparing an ambitious new build target boosted by the Government’s affordable housing drive.

The FTSE 250 company also told shareholders on Wednesday it was more optimistic about trading conditions in the year ahead, citing the Bank of England’s base rate cuts and “a more stable economic outlook”.

The housebuilder’s pre-tax profit for the year rose to £24.8m, down from £31.5m, despite completed home sales rising to 1,772 during the period from 1,723 in the previous 12 months.

Average selling prices fell 0.3 per cent to £185,700, while underlying selling prices rose 1.5 per cent.

The group said that while inflationary pressures around material and labour costs eased during the financial year, it had experienced rising costs at a number of historic sites approaching closure.

He added: “This, combined with the cumulative impact of extended site durations, additional use of sales incentives and multi-unit sales, resulted in a reduction in gross margin from 2.9 percent to 24.1 percent (from 27 percent in 2023).”

Graham Prothero, Gleeson’s chief executive, said: “Profits at Gleeson Land were held back by the vagaries of the planning system, but the business continued to implement its growth strategy, deepening its regional presence and embedding data and analytics across its processes.”

Gleeson shares rose 1.21 percent or 6.8 pence to 568.80 pence on Wednesday, having risen more than 44 percent over the past year.

Prothero also welcomed the Government’s proposed housing policy reforms, which he said would benefit both the Gleeson Homes and Gleeson Land divisions.

He added: “Having spent the last year and a half positioning the business for growth and introducing several related strategic initiatives, we now look forward to executing our strategy and achieving our growth target of 3,000 annual completions.”

RBC analyst Anthony Codling said: “We continue to believe that Gleeson Land represents a hidden gem within the Group and that the planned changes to the National Planning Policy Framework will help accelerate the growth and success of this important division, as well as supporting the core housebuilding business.”

Referring to the 3,000-home build target, MJ Gleeson said he anticipated that “profitability could triple and the company would regain its position as the fastest-growing listed housebuilder in the UK.”

In the near term, the group said that “current market conditions and margin pressures will continue to be seen through fiscal 2025, with net sales site additions expected to remain relatively stable.”