Gleeson’s latest trading update says the company has seen some “positive signs of a recovery in demand” despite its pre-tax profit falling by 55% for the first half of the year.
In its half-year results that were published today, the housebuilder reported a pre-tax profit of £7.2million up to 31 December, a significant reduction from the £16.1million recorded in the same period last year. Its turnover also dropped £171million to £151.5million, a decrease of 11.4%.
Home sales were down 14% year-on-year, with Gleeson recording 769 sales this year compared to 895 the previous year as the industry felt the effects of the tough market conditions.
As its gross margin fell from 27.7% to 24.5%, Gleeson said that it had been impacted 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”.
However, the housebuilder reported an increase in net reservations per site per week, with the figure growing from 0.36 to 0.41. In response to this, the trading update said “the group is seeing encouraging signs of a recovery in demand”.
The housebuilder implemented cost-cutting measures last February, with the firm restructuring and cutting its number of employees by 15%. The trading update said this had delivered the expected cost savings. Gleeson also committed to a pause in new site openings, which it expects to result in its number of sales outlets remaining flats for the next year, although believes it will return to growth as new site openings start again.
Graham Prothero, chief executive at Gleeson, 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.”
