MJ Gleeson may triple earnings with goal of three,000 new properties a yr

MJ Gleeson could see profitability ‘broadly triple’ as it looks to build 3,000 new homes per year, the housebuilder has said. 

The group, which saw revenues tick 5.2 per cent higher to £345.3million in the 12 months to 30 June, is preparing an ambitious new build target driven by the Government’s affordable homes push. 

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

Looking ahead: MJ Gleeson could see profitability ‘broadly triple’ as it looks to build 3,000 new homes per year, it claimed

The housebuilder’s pre-tax profits for the year came in at £24.8million, down from £31.5million, despite home sale completions rising to 1,772 over the period from 1,723 in the previous 12 months.  

Average selling prices slipped by 0.3 per cent to £185,700, while underlying selling prices increased by 1.5 per cent. 

The group said that while inflationary pressures around material and labour costs eased during the financial year, it had experienced an increase in costs on several legacy sites approaching closure. 

It 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 of 2.9 per cent to 24.1 per cent [from 27 per cent in 2023]’.

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

Gleeson shares rose 1.21 per cent or 6.8p to 568.80p on Wednesday, having risen over 44 per cent in the last year.  

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

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

Anthony Codling, an analyst at RBC, said: ‘We continue to believe that Gleeson Land represents a hidden gem within the Group and that the anticipated changes to the National Planning Policy Framework will help accelerate the growth and success of this important division as well as aiding the main housebuilding business.’

In reference to the 3,000 build target, MJ Gleeson said it anticipates ‘profitability could broadly triple and the company would resume its position as the fastest growing listed housebuilder in the UK’. 

In the short-term, the group said ‘current market conditions and margin pressures will continue to be seen through FY2025, with net sales site additions expected to be relatively flat’.