MJ Gleeson’s profits tumble as housebuilders’ dividend suffers
- MJ Gleeson saw its revenue and profits fall, but average selling prices rose
- Share prices of London-listed housebuilders have fallen 14% in the last 12 months
Housebuilder MJ Gleeson’s profits have been hit by economic volatility and worsening consumer confidence.
In the year to the end of June, the group’s pre-tax profit fell 43.2 per cent to £31.5m, while revenue fell 12.1 per cent to £328.3m sterling.
Revenue fell 4.1 per cent at Gleeson Homes, which targets first-time buyers, to £320.8m, while Gleeson Land suffered an 80.7 per cent drop to £7.5m of pounds.
Profits fall: Housebuilder MJ Gleeson has seen full-year profits fall amid economic volatility
MJ Gleeson said the results were in line with expectations, echoing “changing buyer demographics”.
The group said economic uncertainty had continued to weaken the broader market over the summer.
For shareholders, the total dividend for the year to June 30, 2023 will be 14p, up from 18p last year.
Gleeson Homes sold 1,723 homes during the period, up from 2,000 last year. Average selling prices rose 11.3 per cent to £186,200, up from £167,300 a year ago. The gross profit margin on homes sold was 27 percent, up from 29 percent in 2022.
Rising interest rates and higher mortgage costs have deterred some buyers from moving up the real estate ladder.
Gleeson Homes’ net booking rate for the nine weeks to September 1 was 0.43 per site per week, compared with 0.54 for the same period last year. Meanwhile, cancellation rates of 0.10 per site per week remained unchanged.
The firm added: “However, with a stable mortgage market and the implementation of a number of sales and marketing initiatives, including the introduction of a shared ownership package, we anticipate an increase in our net booking rates during the sales season autumn”.
It said: “We also continue to receive interest in multi-unit transactions, which would further strengthen sales.”
MJ Gleeson stock rose today and was up 0.79 per cent or 3.10p at 397.10p this morning, having fallen more than 14 per cent in the last year.
Graham Prothero, group chief executive since January 1, said: “I am pleased to report a strong performance despite the impact on buyer confidence as a result of the current economic volatility.
‘We maintained an acceptable sales rate, supported by our first multi-unit and investor sales.
“We were pleased to see increasing levels of interest from buyers who may previously have considered more expensive homes from other developers, but are attracted to Gleeson’s combination of affordable prices and high quality.”
The group said cutting staff levels and reducing nine regional management teams to six is expected to save the company £3.2m each year.