Housing developer MJ Gleeson says it is ready for growth when homebuyer confidence returns, though that make take some time.
In full-year results, the Sheffield-based builder pointed to early signs of improvements in the marketing, including interest rate cuts and positive intent from the new Government. Gleeson saw a 5.2% rise in revenue to £345.3m in the 12 months to the end of June, but pre-tax profits fell 21.3% to £24.3m and group operating profits fell from £33.6m to £28.6m.
The firm said it had sold 1,772 homes during the year, up from 1,723 last year, but has ambitions to deliver 3,000 homes each year - a growth trajectory it says could triple pre-tax profits and help the firm regain its position as the country's fastest growing housebuilder.
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Slippage in profitably was stemmed by last year's restructuring of Gleeson's homes division, which cost £1m and resulted in reduced headcount and brought three divisions and nine regional management teams into two divisions and six regional management teams. CEO Graham Prothero said the division had exceeded expectations, delivering operating profit of £30.4m, which was down 13.4%.
July's reduction in interest rates was said to have boosted customer confidence, creating hope among Gleeson bosses that the trend would continue over the coming months. The homes division's net reservation rates improved in the 10 weeks to September 6, 2024 at 0.50 per site per week compared with 0.39 per site per week over the same period last year, but the cancellation rate was up slightly at 0.11 per week, compared with 0.10.
Across the group's land division, revenue jumped 117% to £16.3m and operating profits by 120% to £2.2m. Those profits were said to have been held back "by vagaries of the planning system" but with a number of sites close to achieving planning or within the sale process, the division is expected to deliver improved numbers in 2025.
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Mr Prothero said: "Having outlined our strategy for growth last year, we are delighted to have signed Gleeson Homes' first partnership agreement during the year, followed by a second post-period end in August. Diversifying into partnerships will complement our open market business, reducing risk, enhancing efficiency and leveraging economies of scale while accelerating our growth.
"We were also pleased that Gleeson Homes received a strong customer recommendation score of 95.3%, achieving five-star status in each of our six regions. Profits in Gleeson Land were held back by the vagaries of the planning system, but the business has continued to implement its growth strategy, deepening its regional presence and embedding data and analytics throughout its processes. The business is now well positioned for growth, benefiting from a strong land pipeline and, with the election behind us, what is expected to be a more stable planning environment."