"In common with others within the sector, we experienced margin pressures arising from increased sales incentives, extended site durations and multi-unit sales"
- Graham Prothero - Gleeson
Gleeson has seen “positive signs of a recovery in demand”, while reporting a 55% drop in pre-tax profit to £7.2m for its half year (ending December 31 2023) from H1 2022/23’s £16.1m.
Despite beginning its financial year with a strong forward order book, Gleeson said that weak housing market conditions last year impacted its home sales, which dropped by 14% to 769 against the 894 sold during the equivalent period the previous year.
Due to the reduced number of home sales, Gleeson Homes’ revenue fell 14.6% to £142.3m.
However, the company said it was “encouraged” by early signs of improving buyer confidence. In the five weeks to February 9, its net reservations per site per week improved 9% against the same period last year to 0.50. During its half year, the reservation rate was 0.41.
Operating profit in the Homes division fell 44% in the reporting period to £10.2 million; operating margin on homes sold decreased 370 basis points to 7.2%.
The average selling price of homes lifted 0.8% to £185,000 which Gleeson said reflected underlying selling price increases of 1.6% but offset by the effect of multi-unit sales and “changes in site, bed and garage mix”.
Active site numbers in the half year were impacted by the business pausing site openings between October 2022 and June 2023 in response to that period’s market slowdown. As of December 31 2023, Gleeson was selling from 64 active sales outlets against 68 the year before.
The Homes division entered its second half with a forward order book of 586 plots, compared to 665 at the end of its 2022/23 financial year.
Graham Prothero, Gleeson’s CEO, said: “The results for the half year reflect a robust performance given conditions in the housing market during 2023.
“In common with others within the sector, we experienced margin pressures arising from increased sales incentives, extended site durations and multi-unit sales.
“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.”
