MJ Gleeson H1 sales fall, profit margins contract

Low-cost housebuilder MJ Gleeson said on Tuesday that interim sales had fallen and warned that decreased profit margins had swung it to a net debt position for the six months to 31 December.

MJ Gleeson said its Gleeson Homes unit had completed 769 sales in the first half of its trading, down 14% year-on-year, due to weaker conditions seen across the housing market as a whole.

The London-listed firm added that full-year gross margins looked set to have fallen 1.5-2.0% below expectations, principally as a result of additional costs from older sites, as well as extended site durations and sales incentives.

MJ Gleeson added that net debt was £18.7m at the end of the calendar year, a marked turnaround when compared to the net cash position of £5.2m seen at the end of June, as investment was made to bring forward more home starts.

Gleeson Homes also noted that it had entered the second half of the financial year with a forward order book of 586 plots, up from 319 a year earlier.

"Against the backdrop of stabilising interest rates the Board anticipates a recovery in demand for low-cost housing in the seasonally busier selling period over the coming weeks and months. Gleeson Homes also continues to negotiate further multi-unit sales and expects to enter into agreements over the coming months for delivery of homes in the current and next financial year," said MJ Gleeson.

As of 0910 GMT, MJ Gleeson shares had sunk 9.11% to 489.0p.

Reporting by Iain Gilbert at Sharecast.com