Higher costs and planning delays hit MJ Gleeson profits
The group, which specialises in affordable homes and promoting land for residential development, also highlighted planning delays it expects to continue to weigh on the business into next year.
Gleeson had reported solid first half trade with revenues up 4.2 per cent, while the group highlighted 'encouraging signs of a recovery in demand' with reservation rates up 45 per cent over the first four weeks of 2025.
But Gleeson told investors the 'pace of the housing market recovery has not been sufficient' to offset 'a number of headwinds' faced through the year.
'These include increased build costs, flat selling prices, the continued use of incentives and several bulk sale transactions,' It said.
Gleeson's full-year guidance had also been based on the expected sale of 'extensive land holdings in East Yorkshire'.
But delays to this sale mean the group now anticipates that operating profits within its homes business will be 15 to 20 per cent below current expectations.
Gleeson Homes' gross margin for the year to 30 June will likely come in 1 per cent below previous guidance, the group said. The unit's 2026's gross margin is expected to see a similar impact.
The group's land business, meanwhile, has completed three transactions to date and working to complete a further seven disposals before the year end.
Warning signs for the sector?
MJ Gleeson shares were down 22 per cent to 402p in early trading, bringing one-year losses to around 28 per cent.
The update also weighed on the shares of rivals like Persimmon and Vistry Group, which were down 1.4 and 1.9 per cent, respectively.
Analysts at Peel Hunt said: 'There are obvious questions about the read-across to the wider sector.
Our sense is that, despite increased affordability, some of the net margin pressure described above will likely be felt across the sector, as the new build market competes with a second-hand sector seeing high stock levels.
'Similarly, planning issues impact all players. We continue to believe the sector needs to see demand-side support to see a material uptick in housing supply.'
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