Interim profits slide at MJ Gleeson

15th Feb 2024 09:38

(Sharecast News) - MJ Gleeson posted a slide in half-year profits on Thursday, but flagged "encouraging" signs of improving demand for the rest of the year.

The housebuilder, a specialist in low-cost and affordable housing, sold 769 homes in the six months to 31 December, compared to 894 a year earlier.

Total revenues fell 11% to £151.5m, while operating profits tumbled 48% to £8.8m. Pre-tax profits slumped 55% to £7.2m.

The average selling price for homes sold in the period decreased 0.8% to £185,000.

The UK housing market has been hit hard by higher borrowing costs, a spike in mortgage rates, record levels of inflation and the cost of living crisis.

However, mortgage rates have started to ease in recent months, while interest rates have been left on hold since August.

With inflation now well off its peak, most analysts agree the Bank of England will cut rates this year.

Graham Prothero, chief executive, said: "The results for the half-year reflect a robust performance given conditions in the housing market during 2023.

"In common with others within the sector, we experienced margin pressures from increased sales incentives, extended site durations and multi-unit sales. This has been exacerbated by additional costs on a number of older sites."

MJ Gleeson said it was already seeing "encouraging signs of a recovery in demand", however, with net reservations rates of 0.50 in the five weeks to 9 February compared to 0.46 a year previously.

It also reiterated its full-year guidance.

"Against the backdrop of improving mortgage rates, we are seeing positive signs of a recovery in demand," Prothero said. "We expect this to continue into the seasonally busier selling period over the coming weeks and months."

As at 1015 GMT, shares in MJ Gleeson were down 1% at 495.5p.