Profits tumble as Covid-19 hits home for MJ Gleeson

Revenues in the year to 30 June 2020 came in at £147.2m, a 41% fall on the previous year, while pre-tax profits plunged 86% to £5.6m.

Volumes fell 30% to 1,072 units sold, while the gross profit margin on unit sales also eased, from 30.1% in 2019 to 27.8%, following £2.9m of Covid-19 related costs.

The Sheffield-based firm – which specialises in low-cost homes in the north of England and the Midlands – attributed the results to the impact of coronavirus and subsequent lockdown. In March, it shut down all sites, closed sales offices and placed 76% of employees on the government furlough scheme. The last four months of the year are typically MJ Gleeson’s strongest selling period.

But the firm sounded an upbeat note going forward. It reaffirmed its interim target of delivering 2,000 homes per annum in 2022 and said the current financial year had got off to a positive start.

Dermot Gleeson, chairman, said: “We are currently seeing strong demand and expect this to continue through the year as the demographics of our customer base, and the nature and price point of our product, helps to insulate us from the impacts of rising unemployment, the end of the stamp duty holiday and the forthcoming changes to the Help to Buy scheme.”

The majority of MJ Gleeson customers are young, first-time buyers, with around two-thirds classified as key workers.

Aynsley Lammin, analyst at Canaccord Genuity, said the full-year figures were “broadly in line” with the bank’s forecasts. “Notwithstanding macro risks we believe the group is in a good position to deliver very strong volume growth over the next two years,” he added.