MJ Gleeson profits sink 17% after 'challenging year'

(Sharecast News) - Housebuilder MJ Gleeson has reported a sharp fall in annual earnings despite an increase in revenues as higher incentives weighed on profit margins - though the company reiterated targets to treble profitability in the medium term. Revenues were up 5.9% at £265.8m over the 12 months to 30 June, with the number of homes sold rising to 1,793 from 1,772.

However, with underlying selling prices rising by just 0.6% and the gross profit on homes sold dropping to 20.7% from 24.1%, pre-tax profit fell 17.3% to £20.5m.

"This year has been challenging for Gleeson, and despite selling more homes relative to FY2024, there have been factors which stalled our momentum," said chief executive Graham Prothero.

"Market demand has been steady, and we have maintained a robust sales rate, reflected in our net open market reservations rate, up 28% in the second half against the same period last year. Selling prices, however, remained constrained, with incentives continuing at an elevated level, restricting material margin improvement."

The company declared a final dividend of 7p per share, taking the total annual payout to 11p - covered 2.6 times by normalised earnings and in line with last year.

Since the financial year-end, the company said it has seen an improvement in open-market net reservation rates in a "stable market", and highlighted the strong land pipeline of 19,638 plots at the end of June, up 500 over the year.

Looking further ahead, MJ Gleeson reaffirmed its medium-term objective of delivering 3,000 new homes per annum - a target that is estimated to see profit before tax "broadly triple".

"With a number of sites close to achieving planning and others in sale processes, Gleeson Land is well placed to deliver another robust performance in FY2026 and is strongly positioned for significant growth from FY2027," the company said.

Shares were up 2.8% at 350.47p by 0950 BST.