Gleeson profit falls 55% as sales drop

Gleeson has reported a 55% drop in pre-tax profit for the first half of the year.

The housebuilder, in half-year results published today, said it made a pre-tax profit of £7.2m for the six months to 31 December, down from £16.1m the previous year.

Its overall turnover fell 11.4% from £171m to £151.5m over the same period.

The figures were affected by a drop in sales with 769 homes sold in the half year, down 14% on the 894 sold in the same period the year before “reflecting the conditions experienced across the market”.

It said: “The group’s revenue for the first half of this financial year reflects the challenges experienced by the housing market as well as the wider macroeconomic conditions over the period.”

The housebuilder said its gross margin was hit by “additional costs relating to a number of older sites, along with the impact of current market conditions including extended site durations, sales incentives and multi-unit sales” It’s gross margin fell from 27.7% to 24.5%.

It said however its net reservations per site per week, while still low at 0.41, is up from 0.36 the previous year and has increased to 0.50 in recent weeks. It said: “The group is seeing encouraging signs of a recovery in demand,” it said.

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Gleeson said its number of sales outlets is expected to remain flat next year after a temporary pause in committing to new site openings, however after that it expects to return to growth as income from new site openings comes in.

Gleeson also said that its restructure last year, under which 15% of roles were removed, has delivered the “expected full-year cost savings.” It had previously said the move would cut overheads by £4m a year.

Gleeson said its total pipeline of owned plots increased from 17,375 to 18,168 plots year on year, with 16 new sites added.

Graham Prothero, chief executive at Gleeson said: “In common with others within the sector, we experienced margin pressures arising from increased sales incentives, extended site durations and multi-unit sales.

“We have substantially tightened and standardised our operating and reporting processes and cost disciplines.”