MJ Gleeson Trading Update: Spring sales resilient, but restructuring and £5-7m legacy provision flagged

Key Points

• Spring sales resilient but easing: Management said sales rates “held up well” through March–April (net reservations 0.88 per site/week for the 11 weeks to Apr 24) but noted a modest softening over the last 2–3 weeks and lower ex-bulk bookings versus last year.
• Restructuring and material exceptional charges flagged: The group is reorganising regions to deliver about £0.9m of annualised overhead savings, will book ~£3.1m of restructuring costs (mostly non‑cash) as exceptional, and expects an additional exceptional provision of £5–7m for legacy site road adoption issues.
• Land-sale timing and near‑term guidance: A large Gleeson Land sale—representing roughly half this year’s expected plots and market-read gross profit (~£6m)—remains subject to timing risk and could slip into the next financial year; full‑year profit before exceptional items is expected to be in line with consensus, but no FY2027 guidance is being given amid demand and cost uncertainty.

MJ Gleeson LON: GLE said it has seen “resilient trading through the spring selling season” despite higher mortgage rates and negative macro headlines, while flagging a modest recent softening in customer activity and announcing restructuring and legacy site provisions that it expects to treat as exceptional items.

Spring sales resilient, with some recent softening

Chief Executive Graham Prothero told investors the group’s sales rates “have held up well” through March and into April, though he noted “the degree of softening over the last 2 or 3 weeks.” For the 11 weeks to April 24, the group’s net reservation and re-reservation rate was 0.88 per site per week, compared with 0.86 a year earlier. Excluding bulk reservations, the rate was 0.59 versus 0.64 last year.

Prothero said the business has not seen a “buyer’s strike,” but acknowledged the sales environment required more effort during April, with a mid-month dip in visitors and leads before activity improved again. On incentives, he said the level was “still at a reasonable” level at about 4.4% and “pretty consistent across the year.”

He added that selling prices for both open market and partnership sales have been “broadly stable,” while the company has experienced a “modest” build in cost inflation since the start of the year.

Build cost inflation described as modest

On construction costs, Prothero said the business had seen just over 1% inflation since the beginning of the year, with the potential to rise to around 1.5% or higher based on discussions underway.

CFO Stefan Allanson said subcontractor pricing has been subdued, with “labor rates pretty flat” versus the end of last calendar year. He said the company had seen some materials increases, “a little bit on plastics particular,” and noted delivery-related surcharges that he said the company hoped would prove temporary.

Allanson added that attempts by suppliers to raise prices have been “pretty well thwarted” by housebuilders amid “reasonably good stocks and kind of less demand,” while noting that oil prices and geopolitics remain a risk factor.

Gleeson Land: progress on planned sales; large transaction timing remains key

Prothero said Gleeson Land is making “good progress” on the land sales planned for the current year, with several expected to run into June. He highlighted a large site where the company has reached agreement with the highways authority on a technical solution and is awaiting formal confirmation to enable completion. While the group continues to expect completion in the current year, he cautioned there remains a risk the sale could slip into the next financial year.

Discussing land market conditions, Prothero said Gleeson Land focuses on “high-quality prime sites” and described the market as cautious but not collapsing. He said competitive bidding has thinned compared with stronger conditions, with fewer “really credible buyers” actively bidding on sites. “We’re seeing a lot more caution and due diligence,” he said, adding, “it’s absolutely not a market where you’d say, you know, the land market’s collapsed or capitulating.”

Allanson provided additional context on the large land sale, saying it is “not a case of if, it’s a case of when.” He said the site is “roughly 50% of the total plots” expected to be sold across the sites being sold this year, which he said the market has interpreted as around half of expected gross profit. Allanson said his understanding is that consensus implies roughly £6 million of gross profit on that transaction, based on an estimated £12 million for the year, and added the company is “not unhappy with that read across.”

Restructuring to deliver overhead savings; exceptional items outlined

Prothero said the company will continue to pursue efficiency measures following the implementation of Project Transform. He announced the establishment of one Yorkshire region and the relocation of certain Yorkshire East sites into the Midlands region, which he said will improve efficiency and generate annualized overhead savings of about £0.9 million.

He said the company also intends to “rebalance our investment to include more faster-selling suburban areas.” Prothero said related costs of approximately £3.1 million, “the majority of which are non-cash costs,” will be recognized as an exceptional item in the full-year accounts.

Legacy site road adoption issues prompt expected exceptional provision

Prothero said new management teams have identified additional spending needs related to “older completed developments,” primarily issues preventing the adoption of roads by local authorities. He said the required rectification work is expected to cost more than previously accrued.

The company expects to establish an exceptional provision in the current year estimated between £5 million and £7 million, with costs incurred over a number of years. Prothero called the situation “very frustrating,” but said he was pleased with the new teams’ determination to identify and address the issue, noting the company is hiring an experienced adoptions manager.

Responding to analyst questions on the risk of further problems emerging, Prothero said the company has reviewed its “full population” of sites where bonds remain open and has identified the sites and nature of the issues. While he said he could not “guarantee it’s this number” given the site-by-site nature and multi-year timeline, he added: “I’m as sure as I can be that we’re covered.”

Looking ahead, Prothero said full-year profit before exceptional items is expected to be “in line with current market consensus.” He said it was too early to forecast the impact of events in the Middle East on confidence, mortgage affordability, and build cost inflation, and noted the company is not providing guidance for FY2027 due to uncertainty around demand and costs.

About MJ Gleeson LON: GLE

MJ Gleeson plc comprises two divisions: Gleeson Homes and Gleeson Land. Gleeson Homes, under the banner of "Building Homes. Changing Lives" builds high-quality affordable homes across the Midlands and North of England. To meet customer demand, and without compromising affordability, the range of homes available extends from one-bed apartments to five-bedroom houses. With a two-bedroom home available from £100,000, a key objective is to ensure that on all of our developments, a meaningful proportion of homes are affordable to a couple earning the National Living Wage.

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