MJ Gleeson slips to loss and halves dividend after powerful 12 months

MJ Gleeson shares dropped on Tuesday after saying it has slipped to a statutory loss and minimize its dividend by greater than half, as a squeeze on margins and one-off costs overshadowed an increase in residence completions.

The inexpensive housebuilder offered 1,968 houses within the 12 months to 30 June, up nearly 10%, lifting earnings 12% to £410m.

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But profitability fell sharply as adjusted pre-tax revenue halved to £10.8m, and after £13.6m of outstanding costs masking impairments and provisions for legacy websites, the group reported a statutory loss earlier than tax of £2.7m, towards a £20.5m revenue a 12 months earlier.

If historic costs weren’t sufficient, construct value inflation might be an actual concern at 4.5%, outpacing promoting worth progress. A better proportion of lower-priced bulk gross sales is weighing on the houses enterprise, the place the gross margin fell to 18.7% from 20.7%.

Its land promotion arm additionally swung to a small loss after a big transaction slipped into the brand new 12 months. The board minimize the overall dividend to five.0p, from 11.0p, citing prudence in a difficult market.

During the 12 months, Gleeson pushed by means of a serious overhaul of its homebuilding enterprise, generally known as Project Transform, which concerned a regional restructuring, 56 redundancies and new management, and it grew its “capital-light” partnerships enterprise, constructing inexpensive houses with housing suppliers.

The firm stated it anticipated full-year 2027 outcomes to be consistent with market forecasts, which ought to assist cap any draw back in shares.

MJ Gleeson shares had been 4% decrease on the time of writing.