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Gleeson anticipates return to growth

14 Sep 23 Low cost house-builder MJ Gleeson, which targets first-time buyers, saw its sales slide last year but after further cost-cutting is expecting to return to growth.

In the year to 30th June MJ Gleeson made a profit before tax of £30.5m (2022: £42.6m) on revenue of £328.3m (2022: £373.4m).

This year’s results included only £1m of exceptional items (for restructuring and redundancies) compared to £13m in FY2022 (for post-Grenfell building remediation costs).

Despite costing £1m, cutting staff numbers and reducing nine regional management teams to six is expected to save £3.2m every year.

Gleeson Homes sold 1,723 homes during the financial year (2022: 2,000). Average selling prices increased by 11.3% to £186,200 (2022: £167,300) due to underlying selling prices increasing by 7.6% and changes in the mix of homes sold. However, it has now added one-bedroom homes to its range to maximise affordability of its product.

Chief executive Graham Prothero commented: "I am pleased to report a robust performance despite the impact on buyer confidence as a result of current economic volatility. We maintained an acceptable sales rate, supported by our first multi-unit and investor sales. We were pleased to see growing levels of interest from purchasers who might previously have considered more expensive homes from other developers, but who are attracted by the combination of Gleeson's affordable price points and high quality.

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“We took advantage of the quieter market to restructure Gleeson Homes, right-sizing the business for current market conditions and, more importantly, creating a standardised operating platform for the exciting growth which lies ahead. We continued to secure excellent opportunities in our landbank, and we have entered the new financial year in good shape.”

He added: “Economic uncertainty has continued to subdue the wider market over the summer months. Gleeson Homes’ net reservation rate for the nine weeks to 1st September 2023 was 0.43 per site per week compared with 0.54 per site per week over the comparable period last year.

“However, with a steadying mortgage market and the implementation of a range of sales and marketing initiatives, including the introduction this month of a shared ownership package, we anticipate an increase in our reservation rates during the Autumn selling season. We also continue to receive interest in multi-unit transactions, which would further strengthen sales.

“We therefore view the current year with confidence, whilst remaining cautious around continuing risks in the wider economy and any further impact on customer demand. As market conditions improve, we look forward to returning to significant growth.”

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