MJ Gleeson Plunges: Profit Slumps Amidst Cost Pressures

MJ Gleeson (LON: GLE), a key player in the UK housing and land development sector, released its half-year results for the period ended December 31, 2025, revealing a mixed performance in a challenging market environment.

While revenue saw an increase, profit margins were notably squeezed. Investors are now assessing the implications for the full year and beyond.

Revenue: Gleeson reported a total revenue of £173.1 million, a 9.6% increase compared to £157.9 million in the first half of the previous year. Gleeson Homes contributed £168.6 million (up 7.7%), and Gleeson Land saw a substantial 246% surge to £4.5 million.

Profit & Margins: Group operating profit declined by 17.6% to £4.2 million, down from £5.1 million. Profit before tax experienced a more significant drop, falling 52.8% to £1.7 million. Earnings per share (pre-exceptional items) also decreased substantially, from 4.8p to 2.7p. Gross margin on home sales decreased to 19.8% (H1 24/25: 20.6%).

Cash & Balance Sheet: The company's borrowings and overdrafts, net of cash balances, increased to £22.5 million, compared to £18.1 million the previous year. ROCE decreased by 40bp to 7.6%.

The company maintained its dividend per share at 4.0p, signaling a commitment to shareholder returns despite the profit slump. However, the decrease in profitability raises concerns about future dividend sustainability if current trends persist.

Driver Breakdown:

• Gleeson Homes Sales Volume: Increased home sales (848 vs. 801) demonstrate resilient demand.
• Gleeson Land Performance: Significant revenue growth driven by three land sale transactions.
• Cost Pressures: Rising build costs and regulatory headwinds are impacting margins.

CEO Graham Prothero commented, “We are pleased to have delivered a robust performance in a subdued market environment… and are cautiously encouraged by open market buyer activity over the last five weeks which has seen a recovery from the first half.” He emphasized the importance of a strong Spring selling season.

The current trading update indicates early signs of recovery in open market demand, with net reservation rates up 38% in the five weeks to February 6, 2026. However, these rates are still below the levels experienced during the same period last year.

Gleeson Land is making strides with planning permissions secured on all sites expected to sell by the end of the financial year. The division expects to complete five promotion agreements during the second half, strengthening the outlook for future years.

Despite the challenges, Gleeson's management remains optimistic about the medium-term outlook. The operational restructure of Gleeson Homes and the progress in Gleeson Land are expected to position the Group for strong growth in the future.