Gleeson looks to the future after seeing home sales slide 30%

MJ Gleeson saw home sales slide by nearly a third last year but insisted on Thursday that its land pipeline and forward order book remained strong.

In an update ahead of its full-year results, the housebuilder said it had completed the sale of 1,072 homes in the year to 30 June, down 29.9% from 2019’s total of 1,529.

Gleeson attributed the decline to the Covid-19 pandemic and subsequent lockdown and said that current safe working protocols continued to affect build activity on sites. Currently running at 60% of pre-virus levels, they are expected to reach 80% by September.

However, looking ahead to the current year, Gleeson said that the forward order book was £145.3m on 1,033 plots - compared to £87.6m on 677 plots in June 2019 - and that it had over 1,000 built or part-build homes.

It added that in the last four weeks, net daily reservations had risen to more than 80% of pre-Covid levels, with the majority reserved at prices higher than in January and February.

Chief executive James Thomson said: "The impact of Covid-19 on the 2020 results is as expected. What is pleasing is that the business has demonstrated its underlying resilience in the face of enormous challenges, and we are starting the new financial year in a strong position.

"We are confident that, if the current market improvement continues, the group will see a rapid recovery in the 2021 full year."

Liberum analyst Charlie Campbell said: "Gleeson remains one of our favourite housebuilders, as we are convinced that its strong exposure to first-time buyers - 80% - and low price points will prove the most resilient parts of the housing market. We see 18% total shareholder return upside to our target price of 800p, based on a sum of the parts approach."

Liberum, which which has a ‘buy’ recommendation on the stock, is joint broker to Gleeson.