Profit has fallen sharply at MJ Gleeson amid continued pressure on the housing market.
The housebuilder saw pre-tax profit fall to £7.2m in the six months to 31 December 2023, down from £16.1m in the same period in 2022.
Its revenue fell from £171m in the second half of 2022 to £151.5m in the same period in 2023, it announced on Thursday (15 February).
The company sold just 769 homes in the period, down from 894 in the last six months of 2022.
Gleeson chief executive Graham Prothero said the revenue fall reflected “challenges experienced by the housing market” and wider macroeconomic conditions.
“In common with others within the sector, we experienced margin pressures arising from increased sales incentives, extended site durations and multi-unit sales,” he added.
One year ago, the company announced a restructure including 50 job cuts from its 800-strong workforce after its pre-tax profit fell from £24.7m to £16.1m. This week’s announcement said its administrative expenses had dropped 12 per cent to £24.8m as a result.
Net debt has risen to £18.7m, compared with a net cash position of £13.5m 12 months earlier. It said this was due to “an increase in build activity on sites and the investment in bringing forward a higher proportion of home starts before June 2023”.
Prothero said that the planning system “continues to be very poor”, adding that “under-resourced planning departments” are taking more than two years on average to consent to its sites.
“The government has downgraded local housing targets, as confirmed in the recently revised NPPF [National Planning Policy Framework], further weakening the critical obligation on local authorities to make land available for much-needed new homes,” he added.
Nevertheless, Prothero insisted Gleeson’s pipeline was strong.
“Against the backdrop of improving mortgage rates, we are seeing positive signs of a recovery in demand. We expect this to continue into the seasonally busier selling period over the coming weeks and months,” he said.
“The business has traded well in difficult conditions and is well-placed to capitalise on a recovery in the market and resume its exciting growth strategy.”
