MJ Gleeson flags mixed year for homes, land divisions

11th Jul 2024 09:15

(Sharecast News) - MJ Gleeson said in a trading update on Thursday that its full-year results were set to align closely with market expectations.

The London-listed low-cost housebuilder said Gleeson Homes performed robustly, completing the sale of 1,772 new homes, up 2.8% year-on-year.

It was set to achieve an operating profit of £30m, surpassing market expectations.

Despite a slight decrease in net reservation rates, the exclusion of multi-unit agreements showed an improvement, with an 18% cancellation rate.

The forward order book for Gleeson Homes stood at 559 plots, down from 665 plots a year earlier.

MJ Gleeson said the division launched 10 new build sites, starting the new financial year with 79 sites, of which 62 were actively selling.

Gleeson Homes also achieved five-star customer recommendation status in all operating regions.

The firm said Gleeson Land, however, faced challenges in the planning system, selling four sites during the year.

It expected to report an operating profit of around £2m for the division, below market expectations, due to the deferral of a significant disposal coinciding with the general election.

Gleeson Land's portfolio included seven sites with planning permissions or resolutions to grant, offering potential for 1,473 plots.

The group closed the year with net cash of £12.9m, up from £5.2m year-on-year.

A new partnership agreement meanwhile marked the start of Gleeson Homes' strategy to scale up and deliver 3,000 new homes annually in the medium-term.

Looking ahead, the company expected stronger demand for new homes in its Gleeson Homes division, as interest and mortgage rates declined, with growth expected to accelerate in the 2026 financial year.

It also expected a strong performance in 2025 for Gleeson Land, amid a more stable operating environment.

"We have delivered a solid overall performance with Gleeson Homes exceeding expectations in what has been a challenging year," said chief executive officer Graham Prothero.

"We are making progress against our key strategic priority of significantly scaling up our operations over the medium-term.

"Looking ahead, we are anticipating an increase in demand for new homes as interest rates begin to come down and consumer confidence returns."

Prothero said the company also expected Gleeson Land to complete on a number of significant land disposals in the months ahead.

"The agreement of our first partnership site is an exciting development.

"We are encouraged by the number of discussions currently underway with further potential partners and look forward to updating the market on progress in due course."

Graham Prothero said the firm also welcomed the new Chancellor's comments regarding mandatory housing targets, planning reform and other measures to substantially increase the supply of new homes.

"There is much to do if aspiration is to become reality, but the determination that we have seen since the election to get things done marks a positive change in approach.

"Gleeson is ready to play its part in delivering much needed affordable homes."

At 0956 BST, shares in MJ Gleeson were down 2.2% at 577.04p.

Reporting by Josh White for Sharecast.com.