MJ Gleeson (LON:GLE), a prominent housebuilder, has reported a significant drop in its profits and revenues for the year ending June 2023. Pre-tax profit plunged by 43.2% to £31.5 million (£1 = $1.25), while revenues decreased by 12.1% to £328.3 million. The company's two divisions, Gleeson Homes and Gleeson Land, also experienced revenue declines of 4.1% and 80.7%, respectively.
The company attributed these results to "shifting buyer demographics" and the ongoing economic uncertainty that has subdued the broader market during the summer months. The net reservation rate for Gleeson Homes fell to 0.43 per site per week for the nine weeks leading up to September 1, compared with a rate of 0.54 during the same period in the previous year. Cancellation rates, however, remained steady at 0.10 per site per week.
Despite these challenges, average selling prices have increased by 11.3% to £186,200, up from £167,300 a year ago, and the gross profit margin on homes sold was 27%, up from 29% in 2022. The company sold 1,723 homes during this period, down from 2,000 last year.
MJ Gleeson remains optimistic about future sales due to a stabilizing mortgage market and the introduction of several sales and marketing initiatives, including a shared ownership package. It expects an increase in net reservation rates during the autumn selling season and continues to receive interest in multi-unit transactions which could further enhance sales.
The group's Chief Executive Officer Graham Prothero stated: “I am pleased to report a strong performance despite the impact on buyer confidence as a result of the current economic volatility." He also mentioned that they were seeing increased interest from buyers who previously considered more expensive homes from other developers but are now attracted to Gleeson's combination of affordable prices and high quality.
In a bid to cut costs, the group has reduced staff levels and trimmed nine regional management teams down to six, which is expected to save the company £3.2 million each year.
Despite the fall in profits and revenues, MJ Gleeson's stock rose by 0.79% or 3.10p at 397.10p this morning, after having fallen more than 14% in the last year. The total dividend for the year to June 30, 2023, will be 14p, up from 18p last year.
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