Housebuilder MJ Gleeson has seen operating profits almost halved on the back of fewer properties sold, but says there are signs of market recovery.
The low cost developer saw group operating profit of £8.8m in the six months to the end of December, down from £16.8m in the same period the year before. Meanwhile revenue fell 11.4% to £151.5m.
Introducing the results, CEO of the Sheffield-based firm, Graham Prothero said the numbers were reflective of the challenging conditions facing the housing market and wider macroeconomic difficulties. And whilst he expects the market to improve over the coming months thanks to anticipated interest rate reductions, he said Gleeson would keep a cautious outlook as the pace of recovery remained uncertain and the impact of a looming general election was unknown.
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There were "encouraging" signs of demand as net reservation rates moved up to 0.50 in the five weeks to February 9, from 0.46 in the same period of 2023. Gleeson also said restructuring completed in June has provided the cost savings it wanted.
Gleeson's CEO, Graham Prothero said the firm had entered the second half of the year with a strong order book but like competitors it was dealing with pressures on margins from greater use of sales incentives, extended site durations and multi-unit sales.
He said: "This has been exacerbated by additional costs on a number of older sites, which were brought to light by new management teams put in place following the organisational restructuring implemented last year. We have substantially tightened and standardised our operating and reporting processes and cost disciplines.
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"I am pleased with the response from the teams and the new rigour in these areas as we implement these changes. Gleeson Land continues to see strong interest from a range of both large and regional developers although the challenge of achieving planning has increased in the context of the revised NPPF and political sensitivities in an election year.
"We have made good progress in implementing the new structure set out at our Capital Markets Day in July 2023. 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.
"Gleeson Homes continues to negotiate selective multi-unit sales and expects to enter into further agreements over the coming months for delivery in both the current and next financial year. 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."