Revenue, earnings fall as MJ Gleeson restructures

16th Feb 2023 10:28

(Sharecast News) - Low-cost housebuilder MJ Gleeson reported total revenue of £171m in its first half on Thursday, down from £173.5m a year earlier, as demand for consented land remained "strong" and net reservations began to recover.

The London-listed company said revenue at Gleeson Homes rose to £166.7m for the six months ended 31 December, up from £150.2m year-on-year, while Gleeson Land revenue tumbled to £4.3m from £23.3.m.

Operating profit at Gleeson Homes was down 19.1% at £18.2m, while at Gleeson Land it slid 74.5% to £1.4m.

The group's profit before tax for the period was 34.8% weaker than the year-ago period at £16.1m, while cash net of borrowings fell 64.7% to £13.5m.

It reported a return on capital employed of 20%, down 290 basis points, while earnings per share were 36% lower at 2p.

The board announced a dividend of 5p per share, down from the 6p distribution it made for the first half of the 2022 financial year.

Looking ahead, Gleeson said it expected to deliver between 1,650 and 1,850 homes in the 2023 fiscal period, depending on the pace of recovery.

It also said an organisational restructuring was underway in a bid to reinforce its "strong platform" for "sustainable" growth.

"I am delighted to have taken up my role as CEO and, as I continue to embed myself in the business, am hugely impressed with our talented and committed colleagues, our excellent product, exciting land pipeline and, above all, our team's enthusiasm for our ethos of 'building homes, changing lives'," said chief executive officer Graham Prothero.

"We have an exciting opportunity to take Gleeson to the next level by delivering sustainable growth over the medium-term, across both our Homes and Land divisions.

"At the same time as managing through the lower levels of current market demand, I want to ensure that the group is in the best possible shape to take advantage of the recovery which we are beginning to see early signs of."

Prothero said building on the company's "strong platform", his focus was on optimising its organisational structure and making the group 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."

At 0958 GMT, shares in MJ Gleeson were up 0.33% at 454.5p.

Reporting by Josh White for Sharecast.com.