Profits drop at housebuilder amidst difficult environment
Sheffield-based housebuilder, MJ Gleeson, has reported a 34.8% fall in pre-tax profits, from £24.7m in half one 2021/2022 to £16.1m in 2022/2023 amidst a significant slowdown in demand.
Releasing its results for the half-year ended 31 December 2022, which also includes a 1.4% decline in total revenue over the same period from £173.5m to £171m, the business attributes the tough situation to market volatility and the sharp increase in interest rates following the Government’s disastrous mini-budget.
It says this reduced affordability and severely impacted buyer confidence, while supply chain and inflationary pressures exacerbated by the Ukraine war have continued to put pressure on costs.
Graham Prothero, chief executive officer, said: “At the same time as managing through the lower levels of current market demand, I want to ensure the group is in the best possible shape to take advantage of the recovery which we are beginning to see early signs of.
“Building on the strong platform I have inherited, my focus is on optimising our organisational structure and making us more operationally efficient and fit for further growth. This will also result in significant annualised savings of circa £4m.
“In terms of guidance: confidence, underpinned by improved mortgage rates, is slowly returning to the market, evidenced by improving net reservations.
“With full-year volumes dependent on the pace of recovery, we now expect to deliver between 1,650 and 1,850 homes.”
MJ Gleeson adds that as well as net reservations starting to recover, demand for consented land remains strong.
The group’s defensive measures – which are focused on managing its working capital and costs – include slowing build rates on some sites in line with demand, delaying the opening of new sites, maintaining strong discipline on land buying and freezing recruitment.
