Housebuilder MJ Gleeson experienced a drop in full-year profits amid a backdrop of economic instability and declining consumer confidence, as reported on Thursday. The company's profit before tax and exceptional items fell 43.2% to £31.5 million for the year ending June, with revenues declining 12.1% to £328.3 million. The revenue at Gleeson Homes decreased by 4.1% to £320.8 million, and Gleeson Land saw an 80.7% drop to £7.5 million.
The Yorkshire-based firm recorded fewer home sales throughout the year, with the numbers falling from 2,000 to 1,732. This decline contributed to a 4.1% decrease in revenue across Gleeson's housebuilding division, while its land division faced a substantial revenue drop of 80.7%. The company attributed this fall to a reduction in land sales from six to three over the year.
Despite the challenging market conditions, Gleeson expressed optimism for the upcoming Autumn selling season, anticipating an increase in net reservation rates due to a stabilizing mortgage market and new sales and marketing initiatives. These initiatives include the introduction of a shared ownership package and interest in multi-unit transactions that could potentially boost sales.
Gleeson also noted shifting buyer demographics impacting their results, with a decrease in first-time buyers following the end of the Help to Buy scheme. However, they have observed increased demand among buyers over 55 and an 11.3% rise in the average selling price of homes to £186,200 (£1 = $1.2483).
In response to these market conditions, Gleeson has undergone restructuring efforts that reduced nine regional management teams down to six and adjusted overheads to align with current volumes. Chief Executive Graham Prothero expressed confidence in reaching the company's goal of building 3,000 homes annually despite the economic volatility.
Prothero stated, "We took advantage of the quieter market to restructure Gleeson Homes, right-sizing the business for current market conditions and, more importantly, creating a standardised operating platform for the exciting growth which lies ahead."
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